Monaghan v Australian Capital Territory (No 3)
[2017] ACTSC 22
•10 February 2017
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Monaghan v Australian Capital Territory (No 3) |
Citation: | [2017] ACTSC 22 |
Hearing Date(s): | 16 December 2016 |
DecisionDate: | 10 February 2017 |
Before: | Mossop AsJ |
Decision: | Plaintiff awarded costs fixed in the sum of $20,000 |
Catchwords: | COSTS – Plaintiff obtains judgment for $2,453 – costs incurred by solicitors disproportionate to claim – operation of s 181 of Civil Law (Wrongs) Act 2002 (ACT) in relation claims including claims for damages for personal injury and other claims – claim for damages for deprivation of liberty not claim for “personal injury damages” – fixed sum of costs awarded in circumstances where solicitors agree to not recover in excess of fixed sum from plaintiff |
Legislation Cited: | Civil Law (Wrongs) Act2002 (ACT) Civil Law (Wrongs) Amendment Regulation 2004 (ACT) Civil Liability Act 2002 (NSW) Civil Procedure Rules 2006 (ACT)Human Rights Act 2004 (ACT) |
Cases Cited: | Monaghan v Australian Capital Territory [2015] ACTSC 187 Monaghan v Australian Capital Territory (No 2) [2016] ACTSC 352 State of New South Wales v Williamson (2012) 248 CLR 417 State of New South Wales v Williamson [2011] NSWCA 183 |
Parties: | Jason Arthur Monaghan (Plaintiff) The Australian Capital Territory (Defendant) |
Representation: | Counsel Mr P Tierney (Plaintiff) Mr P Saidi (Defendant) |
| Solicitors Ken Cush & Associates (Plaintiff) ACT Government Solicitor (Defendant) | |
File Number(s): | SC 77 of 2014 |
MOSSOP AsJ:
Introduction
On 30 November 2016 I ordered that judgment be entered for the plaintiff in the sum of $2453: Monaghan v Australian Capital Territory (No 2) [2016] ACTSC 352. These reasons concern the issue of costs which were the subject of further submissions from the parties.
Evidence
Each party tendered a schedule of documents relevant to the question of costs. Those documents and the court file disclose the following relevant facts.
On 12 September 2011 the plaintiff’s solicitor sent to the defendant’s solicitor a personal injury claim notification form pursuant to the Civil Law (Wrongs) Amendment Regulation 2004 (ACT) as well as the file note of Ms Curley referred to in the principal judgment and the transcript of proceedings before Penfold J on 28 March 2011 and a record of the orders made by Refshauge J on 24 March 2011. The personal injury claim notification form identified the cause of the plaintiff’s injury as being wrongful imprisonment.
On 27 April 2012 the solicitor for the defendant made a without prejudice offer that provided:
Without admission of liability, and in the interests of facilitating a quick and cost-effective resolution to this matter, I am instructed to offer the sum of $5,000.00 inclusive of costs and disbursements in full and final settlement of your client’s claim.
I look forward to your client’s response.
No response was received from the solicitor for the plaintiff. There is no evidence that would explain as to why no response was given notwithstanding correspondence on 24 July 2012 reminding the solicitor for the plaintiff of the offer and the absence of any response.
The originating claim was filed on 20 February 2014. The originating claim and statement of claim was served under cover of a letter dated 13 March 2014.
On 19 February 2015 the defendant made a Calderbank offer which, if accepted, would have permitted the plaintiff to discontinue his claim with no order as to costs. A without prejudice letter of the same date provided reasons for the making of that offer by reference to the discoverable material.
On 20 July 2015 I gave my decision on an interlocutory application relating to the conduct of a mediation and the payment of the mediation fee: Monaghan v Australian Capital Territory [2015] ACTSC 187. As the reasons that I gave made clear this decision involved significant criticism of the manner in which the solicitors for the plaintiff had addressed the issue of compliance with court orders and payment by the plaintiff of the costs of court-facilitated mediation.
On 3 August 2015 a consent to act as a litigation guardian and undertaking in relation to costs by the plaintiff’s mother Anne Monaghan was filed. There is no explanation as to why the appointment of a litigation guardian was necessary at this point in the proceedings but not necessary at the earlier stages of the proceedings.
By letter dated 6 August 2015 the plaintiff made a Calderbank offer to settle his claim for $19,000 plus costs. On the same date he made an offer of compromise under the rules to settle for a judgment in his favour for $19,000 which was open for a period of 30 days.
On 7 August 2015 the plaintiff’s solicitors wrote to the defendant solicitors indicating that they were “currently seeking instructions” about an application to transfer the proceedings from the Supreme Court to the Magistrates Court pursuant to rule 1430 of the Civil Procedure Rules 2006 (CPR) (ACT). The letter noted that any such transfer would require the hearing date in the Supreme Court (which was at that time set for hearing in the central civil list commencing on 12 October 2015) to be vacated. No reason for having the matter transferred to the Magistrates Court in those circumstances was identified in the letter (or at any other time).
By letter dated 13 August 2015, emailed on 14 August 2015, the solicitor for the defendant identified that she was unable to assess the reasonableness of the plaintiff’s offer because of the lack of particularisation of the claim and uncertainty as to the terms of the offer. The letter asked various questions in relation to the cause of action relied upon and an enquiry as to the application of rules 1725 to any order for costs contemplated by the offer.
By letter dated 24 August 2015 the solicitors for the plaintiff failed, without any explanation, to respond to the enquiries of the defendant’s solicitor in relation to various aspects of the cause of action relied upon and declined to make any concession in relation to the operation of rule 1725. The letter advised that the plaintiff’s costs were estimated at $24,000 and disbursements at $18,000, a total of $42,000.
By letter dated 3 September 2015 emailed on 4 September 2015 the defendant rejected the plaintiff’s offers and made a Calderbank offer proposing a judgment for the plaintiff in the sum of $10,000 plus $10,000 for costs. The costs figure was arrived at because the Territory considered that the matter was subject to the limitation in s 181 of the Civil Law (Wrongs) Act 2002 (CLW Act). The letter also drew attention to the operation of rule 1725 and the fact that the amount of $10,000 would be within the jurisdictional limit of the ACT Civil and Administrative Tribunal where a claimant would have no entitlement to costs.
At the request of the plaintiff’s solicitors the offer was held open for an additional seven days until 24 September 2015.
By email dated 17 September 2015 the plaintiff solicitors identified the total disbursements were currently $17,527.56 including almost $15,000 for counsel’s fees. The email suggested that if the offer was $38,000 inclusive or $10,000 plus costs and disbursements to be agreed or assessed then the solicitor could “discuss with my client and see what can be done from my end”.
On 22 September 2015 the defendant made a further Calderbank offer increasing the earlier offer by $990 for disbursements. The offer remained open until 25 September 2015.
By letter dated 22 September 2015 the plaintiff made a Calderbank offer to settle the proceedings for $10,000 plus costs. The letter also indicated that the plaintiff would rely upon the letter and previous correspondence in relation to the court’s discretion under rule 1725(3).
By letter emailed on 24 September 2015 the defendant rejected the plaintiff’s Calderbank offer, repeating the matters identified in the letter of 3 September 2015.
The hearing occurred on 12, 13 and 14 October 2015. Judgment was given on 30 November 2016.
On 5 December 2016 the plaintiff made an offer of compromise under the rules that the defendant pay the plaintiff’s costs on a party and party basis to be assessed in accordance with schedule 4, part 4.2 of the CPR.
By email dated 6 December 2016 the solicitor for the defendant inquired as to what the party and party costs were likely to be. She received the unhelpful reply that if there was no agreement “this can be assessed”. By email sent on 9 December 2016 the offer of compromise was not accepted.
As at 9 December 2016 the Public Trustee and Guardian was the manager of the property and financial affairs of the plaintiff as a result of an order of the ACT Civil and Administrative Tribunal date 6 September 2016. The Public Trustee and Guardian indicated that it would charge 1.1% fee on the total amount received. On 9 December 2016 the solicitors for the plaintiff wrote to the defendant solicitors saying that they were instructed to seek that an amount of $26.98 be awarded to the plaintiff for funds management. That amount was 1.1% of the judgment sum. Funds management had not been sought in the statement of claim or previously particularised as an item of damages. The costs incurred in the writing of the letter would have exceeded the additional amount sought.
On 5 December 2016 the solicitors for the plaintiff had requested from a costs consultant an assessment of the plaintiff’s professional costs and disbursements that would be recoverable on a party and party basis under schedule 4, part 4.2 of the CPR. On 9 December the solicitors for the plaintiff served the report of Mr Chapman and his briefing letter. The report identified that an amount of $72,727.41 would be recoverable made up of $43,350 for professional costs and $29,377.41 for disbursements. The letter of the plaintiff’s solicitor invited the defendant to agree to a costs order for $72,727.41. The letter indicated that costs would be increased if counsel was required to attend the hearing listed for 16 December 2016.
Submissions
The defendant submitted:
(a)The plaintiff advanced claims in negligence, wrongful imprisonment and under the Human Rights Act 2004 (HR Act). The plaintiff was unsuccessful in establishing a large number of matters and a large proportion of the court’s time and the time of the defendant was utilised in addressing matters upon which the plaintiff was unsuccessful.
(b)The plaintiff’s claim was a claim for “personal injury damages” for the purposes of the CLW Act.
(c)The Calderbank offer reflected a generous award to Mr Monaghan as well as the maximum recoverable legal costs under the CLW Act for an award under $50,000 in a personal injury claim.
(d)So far as the operation of rule 1725 was concerned although a matter in which the HR Act is pleaded is properly filed in the Supreme Court, the plaintiff was not successful in establishing the matter as pleaded under the HR Act, he recovered no greater damages than if he had been successful under the HR Act and he decided to pursue the HR Act claim when he had two other substantially similar causes of action on foot.
(e)In circumstances where the claim was always going to be worth significantly less than the limits of the Magistrates Court’s jurisdiction and the $50,000 threshold provided under s 181 of the CLW Act, the pursuit of the matter appeared to be premised more on the recovery of costs then the interests of the plaintiff or of justice. If the defendant was ordered to pay the plaintiff’s costs those costs should be proportionate to the success of the plaintiff’s various causes of action.
The order sought by the defendant was that the plaintiff pay the defendants costs on an indemnity basis from the date of the Calderbank offer namely 3 September 2015 and that there be otherwise no order as to costs.
The plaintiff submitted that:
(f)Section 181 of the CLW Act was not relevant because the action was not one for personal injury damages. He submitted that any component of emotional distress experienced by the plaintiff does not convert the claim from one properly identified as a claim for damages arising from the plaintiff’s loss of liberty.
(g)While rule 1725 potentially applied to the case the court should exercise its discretion under sub rule (3) to award costs to the plaintiff.
(h)The defendant’s Calderbank offer was not an effective one because “the defendant did not challenge the plaintiff’s estimate of costs” there was no compromise in relation to the plaintiff’s costs.
(i)It is necessary for the defendant to establish that the plaintiff’s rejection of the Calderbank offer was unreasonable. The plaintiff’s response to the Calderbank offer was not unreasonable.
(j)The proceedings “involved an important human rights dimension in securing a vindication of the plaintiff’s rights”.
The plaintiff invited the court to fix a sum for costs in favour of the plaintiff pursuant to rule 1720(3)(c) and the plaintiff’s solicitor and counsel undertook to be bound by any such award.
Consideration.
The remarkable feature of the facts described above is that prior to the commencement of the proceedings the defendant had offered to settle plaintiff’s claim for $5000 and not only was there no response at all to that offer but the plaintiff through his solicitors then ran up $72,727.41 of costs assessed on a party and party basis in order to recover an amount of damages of $2453.
The failure to make any response to the settlement offer of 27 April 2012 was, in my view, unreasonable. There was no explanation as to why there was no response. There was no evidence that the plaintiff’s costs at that stage exceeded the cost of completing a claim notification form and basic consideration of the documents that were provided to the defendant with the form. While the offer was an inclusive one and did not state that it would be relied upon in relation to costs, the making of the offer, which by reference to the ultimate outcome was clearly a reasonable one, is a matter relevant to the question of costs. However it cannot be given the same effect as it would have if it was a Calderbank offer.
The distinct impression conveyed by the facts set out above, as well as from the unfortunate circumstances surrounding the handling of the issue of the payment of mediation fees as described in my earlier decision, is that the proceedings have been conducted by the solicitors for the plaintiff in a manner more targeted at running up the costs that might ultimately be recovered from the defendant than recovering at an early stage a reasonable amount to compensate the plaintiff for the wrong that was inflicted upon him by the negligence of the Territory.
Clearly conscious of the impression with which the Court might be left by the evidence that was available in relation to the manner in which the issue of costs had been dealt with, counsel for the plaintiff in his written and oral submissions quite sensibly made no attempt to support the proposition that the plaintiff and his solicitors might be entitled to recover $72,727.41 for costs. He instead invited the court to fix the amount of costs and indicated that no additional amount beyond that fixed by the court would be sought to be recovered from the plaintiff himself. Further, his submissions placed significant emphasis upon the unusual nature of the case and the public interest and human rights issues that were involved in the case.
While these submissions were well put and are matters of substance, they are not sufficient to dispel my conclusion that the manner in which the proceedings were conducted failed to give appropriate consideration to settlement of the proceedings in circumstances where, if the plaintiff was unsuccessful, any costs order made against him was likely to be of no value to the Territory.
Having regard to the fixed amount offered for costs in the Calderbank offer made by the Territory dated 3 September 2015 its effectiveness in a case where the party and party costs would clearly have exceeded that amount is dependent upon the claim being subject to s 181 of the CLW Act. Relevantly, that section provides:
180 Definitions—pt 14.1
In this part:
costs do not include—
(a) disbursements that are charges for services other than legal services; or
(b) disbursements that are counsel’s fees on a brief to appear in an action; or
(c) any other disbursements.
court includes a tribunal or arbitrator.
personal injury damages means damages that relate to the death of, or injury to, a person caused by someone else’s wrongful act or omission (whether or not an offence).
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.
(3) Subsection (2) is subject to the following sections:
· section 182 (Costs incurred after offer of compromise not accepted)
· section 183 (Exclusion of costs unnecessarily incurred etc)
· section 184 (Court discretion to allow additional costs).
(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.
Section 183 permits the court to exclude from the operation of s 181 costs incurred in response to an action on the claim by or on behalf of the other party. Similarly, s 184 permits the court to allow stated additional costs arising because of the complexity of the claim or the behaviour of one or more parties to the claim.
The existence of these exceptions will make it difficult to rely, as the Territory did in the present case, upon the $10,000 costs limit for the purposes of a Calderbank offer. That is because it will be necessary to prove not only that the claim is governed by s 181 but also that the offer in relation to costs was unreasonably refused in circumstances where the party who received the Calderbank offer would be entitled, on any argument in relation to costs, to seek orders under ss 183 or 184.
The application of s 181 present case is complicated because of the use of the phrase “amount recovered on a claim for personal injury damages” in s 181(1). In an ordinary personal injury claim arising out of a work or motor vehicle accident there will be no difficulty with the application of s 181. The potential for difficulty arises because the legislature has given no statutory indication of how mixed claims should be dealt with. In the present case the statement of claim involved claims for damages for loss of liberty and personal injury arising from a loss of liberty caused by negligence, damages for loss of liberty and personal injury arising from wrongful imprisonment and a claim for compensation pursuant to a statutory right said to exist under the Human Rights Act 2004 (ACT). The plaintiff succeeded on the negligence claim but only in relation to damages for a bare loss of liberty. In those circumstances is it appropriate to characterise the damages awarded as an “amount recovered on a claim for personal injury damages”?
A similarly worded costs limitation provision was the subject of consideration in State of New South Wales v Williamson (2012) 248 CLR 417. In that case a majority found that a claim for false imprisonment, to the extent to which it sought damages for deprivation of liberty, was not a “claim for personal injury damages” within the meaning of s 11 of the Civil Liability Act 2002 (NSW). The Court was not required to fully explore the application of the statutory provision to mixed claims because in that case it was addressing an undivided sum to be awarded as damages which had been agreed as part of a settlement. The judgment entered was therefore consistent with there being damages only for the deprivation of liberty with no allowance for personal injury: see [34]-[35]. As a result it was not possible to show that the sum recovered was recovered on a claim for personal injury damages for the purposes of the statute.
The issue of mixed claims was also referred to in the principal judgment of the New South Wales Court of Appeal in the judgment that was then appealed to the High Court (State of New South Wales v Williamson [2011] NSWCA 183). Campbell JA, said (at [66]):
I do not accept that claiming that one of the consequences of a false imprisonment is the suffering of a personal injury, is sufficient to characterise the entire claim for false imprisonment is one for “personal injury damages”.
Although he discussed the issue further at [67], because of the undivided settlement sum involved in that case he was not obliged to finally resolve the application of the statute in circumstances where a mixed claim is determined by the court.
In the light of the conclusion of the High Court in Williamson, it is clear that in recovering damages for a bare loss of liberty the plaintiff has failed to recover any damages which could be characterised as personal injury damages. In working out how to apply s 181 in a case such as the present it is relevant to consider:
(a)A limitation on the costs that are recoverable will not usually be required where a party has been unsuccessful on a claim because no order will usually be made in the party’s favour.
(b)Where the claim is only one of several claims brought in proceedings then, where the plaintiff is unsuccessful on the personal injury component of the claim, the issue will be whether the plaintiff’s failure on that claim should result in an alteration of the usual rule in relation to the claims on which the plaintiff was successful or some apportionment of the costs as between claims upon which the plaintiff was successful or unsuccessful.
In the present case having only recovered on the non-personal injury aspects of the claim I am that of the view that s 181 does not apply because the plaintiff has not recovered any “amount ... on a claim for personal injury damages”. In relation to the personal injury component of this claim the issue is whether his failure on that aspect of the claim should modify whatever entitlement he might otherwise have to costs by reason of his success.
Because s 181 does not apply the defendant cannot establish, in relation to its Calderbank offer of 3 September 2015, that the offer was more favourable to the plaintiff then that which he would achieve as a result of the more modest judgment he ultimately obtained in his favour.
In summary neither s 181 nor the Calderbank offer are determinative in relation to costs. The question of costs must be considered on a broader basis having regard to the reasonable offer of settlement made by the defendant prior to the commencement of proceedings, the various offers that were exchanged during the course of the proceedings and the modest success that the plaintiff has achieved.
In addition to my concerns about the manner in which the case was run expressed at [31] above, in my view the most relevant considerations in relation to costs are as follows:
(a)The claim was an unusual one in that it involved a claim for damages for imprisonment arising as a result of negligence.
(b)The claim involved issues relating to the operation of the CLW Act which were, because of the unusual nature of the claim, difficult to resolve and not the subject of clear authority.
(c)While reflecting reasonable attempts to settle the proceedings the offers made by the Territory were either ineffective as Calderbank offers (27 April 2012) or not shown to have been more favourable than the result achieved by the plaintiff (19 February 2015, 3 September 2015).
(d)The human rights claim was one which, because of the terms of the Human Rights Act 2004 (ACT) could not have been brought in the Magistrates Court and hence the case is not one to which rule 1725 applies.
(e)But for the human rights claim the usual discipline imposed by r 1725 would have applied and the plaintiff would have only been able to recover his court fees and 50% of his disbursements;
(f)The inclusion of the HR Act claim, while technically justified by reason of the possibility, having regard to the authorities, that some additional quantum of damages may be awarded for the vindication of the plaintiff’s rights, involved substantial extra work on the plaintiff’s part and did not materially advance his position.
(g)While there was clearly a degree of uncertainty as to how general damages would be assessed it was always unlikely in the plaintiff’s circumstances to have involved an award of less than $10,000. That fact would have been clearly apparent to the solicitors for the plaintiff no later than the receipt of the report of Mr Aldridge dated 27 May 2015.
(h)The case involved a two and half day final hearing and a contested hearing in relation to costs, only very limited expert evidence and a procedurally uncomplicated preparation of the matter for hearing. The only exception to this was the contest over mediation fees the subject of my interlocutory decision.
Having regard to these factors I consider it appropriate to take up the invitation made by counsel for the plaintiff to fix the amount of costs awarded in the light of the expert evidence as to the amount that is likely to be recoverable if an order of party and party costs were made and the matters to which I have referred above.
I consider that an award of costs fixed at $20,000 is appropriate. I have arrived at this figure in the light of factors referred to above. It involves some reduction upon the amount that would be fixed if an award was based on an assessment of the costs that would have been incurred if a disciplined and proportionate approach was taken to the preparation of the matter for hearing. It reflects a degree of parsimony having regard to the undertaking by the plaintiff’s solicitors to not seek to recover further costs from the plaintiff himself and the Court’s disapproval of the disproportionate costs that would be awarded if costs were assessed on a party and party basis in the usual manner. The costs order does not affect the undertaking by the plaintiff’s solicitors referred to in my earlier interlocutory decision: see Monaghan v Australian Capital Territory [2015] ACTSC 187 at [31].
The order of the Court is:
1.The defendant is to pay the plaintiff’s costs of the proceedings fixed in the sum of $20,000.
| I certify that the preceding forty-eight [48] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Associate Justice Mossop Associate: Date: 10 February 2017 |
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