Reynolds v Sunsuper Pty Ltd (No 2)
[2016] QDC 167
•5 July 2016
DISTRICT COURT OF QUEENSLAND
CITATION:
Reynolds v Sunsuper Pty Ltd & Anor (No 2) [2016] QDC 167
PARTIES:
LISA ANNE REYNOLDS
(plaintiff)
v
SUNSUPER PTY LTD
(first defendant)
And
AIA AUSTRALIA LIMITED
(second defendant)
FILE NO/S:
BD 2353/14
DIVISION:
Civil
PROCEEDING:
Claim
ORIGINATING COURT:
District Court at Brisbane
DELIVERED ON:
5 July 2016
DELIVERED AT:
Brisbane
HEARING DATE:
On the papers
JUDGE:
Dorney QC DCJ
ORDERS:
(Pronounced on 24 June 2016)
CATCHWORDS:
Costs – where defendants ultimately successful – where “late” concession as to an issue – where Calderbank offer
LEGISLATION CITED:
CASES CITED:
Insurance Contracts Act 1984 s 48A
Property Law Act 1994 s 55
Uniform Civil Procedure Rules 1999 r 361, r 681, r 684, r 700A, r 703
Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd (No 2) [2014] NSWSC 891
Carlyon v Town & Country Pubs No 2 Pty Ltd [2015] QSC 25
Comgroup Supplies Pty Ltd v Products for Industry Pty Ltd & Anor [2016] QCA 130
Murdoch v Lake [2014] QCA 269
Panos v FSS Trustee Corporation [2015] NSWSC 1217
Reynolds v Sunsuper Pty Ltd & Anor [2016] QDC 129
Stewart v Atco Controls Pty Ltd (No 2) (2014) 252 CLR 331
Sultana Investments Pty Ltd v Cellcom Pty Ltd (No 2) [2009] 2 Qd R 287
TAL Life Ltd v Sheutrim; Metlife Insurance Ltd v Sheutrim [2016] NSWCA 68
COUNSEL:
M Horvarth for the Plaintiff
K F Holyoak for the First and Second Defendants
SOLICITORS:
Turner Freeman for the Plaintiff
Cooper Grace Ward for the First and Second Defendants
Introduction
On 7 June 2016, I gave judgment for the defendants against the plaintiff and gave leave to file, and serve, submissions on costs.
Both sides have now complied with that leave and, at my request, have filed and served further additional submissions.
Background
On the first day of trial, I was informed by both sides that the first defendant had agreed with the plaintiff that it would abide the decision of the Court and that the plaintiff, for her part, would not proceed with her claim for the superannuation account balance “at this time”. As I remarked in Reynolds v Sunsuper Pty Ltd & Anor,[1] it had the consequence that the only issue was whether the plaintiff had a viable claim under the relevant Insurance Policy: at [3].
[1][2016] QDC 129.
By agreement it was also unnecessary to canvass the first stage of the two-stage process I referred to at paragraph [7]. Nevertheless, that has become a major factor in this argument on costs.
Although both parties have set out a detailed chronology, the important relevant dates for taking steps in this proceeding were: the filing of an amended statement of claim on 13 October 2015; the filing of an amended defence on 2 December 2015; and the filing, with leave, of a further amended defence on 21 March 2016 (the first day of the trial).
Two further important background facts were the service of two Calderbank letters on the plaintiff’s solicitors which were sent by the defendants’ solicitors. The first letter was dated 27 April 2015 and, relevantly, offered payment of $35,000.00 “all up”, that proceedings be discontinued and that settlement be conditional upon certain terms, including the execution of a mutually agreeable deed of release and discharge. It remained open for acceptance until close of business on Monday 4 May 2015. As the conditions intimated, there was no draft deed of release and discharge proffered at that time.
The second letter was dated 19 February 2016 and offered payment of $50,000.00 “all up”, that proceedings be discontinued and that there be essentially the same conditions, although this time there was an attached deed of release, discharge and indemnity. The offer remained open until 4pm on 26 February 2016.
With respect to the agreement that the first defendant take no active part in the trial, this was finalised on or about 19 March 2016 following the exchange of correspondence between the two sets of solicitors.
The reason for mentioning the late pleadings is that the defendants contend that the late 2015 amendments were necessary so that the plaintiff’s case, particularly against the second defendant, could be properly understood.
Relevant authorities
Very recently, the Queensland Court of Appeal in Comgroup Supplies Pty Ltd v Products for Industry Pty Ltd & Anor[2] held that the law with regard to costs when a Calderbank offer has been made was set out in Stewart v Atco Controls Pty Ltd (No 2)[3] where it was held that, while the Court had a general discretion as to costs, the non-acceptance of such an offer is a factor, and in some cases a strong factor, to be taken into account on the application for indemnity costs. While the High Court did not necessarily accept that the test of rejection was one of unreasonableness, it did state that, “if that be the test”, it would appear to require that at least the rejector point to a reason for not accepting the offer “beyond the usual prospects of being successful in litigation”: at [2].
[2][2016] QCA 130.
[3](2014) 252 CLR 331.
Comgroup involved a case, on appeal, where the applicant was entirely unsuccessful and the respondents were entitled to their costs. It was held that the fact that they made a Calderbank offer which was rejected was “a strong factor in favour of their application for indemnity costs”: at [7]. This was particularly so where the rejection of the offer was held to be “unreasonable” because the compromise offered “was considerably more advantageous to the applicant than the decision made by the court”: at [7].
Given that there is no opposition to the basic proposition that the amendment to r 361 of the Uniform Civil Procedure Rules 1999 (“UCPR”) does not apply in this case (as held in Carlyon v Town & Country Pubs No 2 Pty Ltd),[4] there is no choice under the old rule but to make a Calderbank offer: see Sultana Investments Pty Ltd v Cellcom Pty Ltd (No 2).[5] That case also noted that there – as here - it was an “all up” offer but that was held to be “not a weighty countervailing factor”: at 292 [18].
[4][2015] QSC 25.
[5][2009] 2 Qd R 287 at 290 [9].
While r 681 of the UCPR states the general rule that costs of a proceeding are in the discretion of the court but follow the event (unless the court orders otherwise), indemnity costs can be awarded in the discretion of the court pursuant to r 703.
Additionally, r 684 of the UCPR is relevant because the court may make an order for costs in relation to “a particular question in, or particular part of, a proceeding”: see r 684(1). Furthermore, by r 684(2) the court may declare what percentage of the costs of the proceeding is attributable “to the question or part of the proceeding to which the order relates”.
In Murdoch v Lake[6] Morrison JA, with whom Boddice J agreed, canvassed both r 681 and r 684 of the UCPR. After he noted that the “usual” rule is that costs of a proceeding follow the event, he stated that the rule embodies the “general principle” that, subject to certain exceptions, a successful party in litigation is entitled to an award of costs in its favour: at [19]. In Murdoch, Morrison JA held that, in respect of the questions fought in that case, one could rightly be considered to be discrete from the others and that, since “a measure of time and effort was taken to oppose” it (which was successful), one could properly categorise the issue concerning the question as an “event” for the purposes of r 681, noting that it was “not a trivial issue”: at [27].
[6][2014] QCA 269.
Regarding similar cases decided by the courts in New South Wales, Birdsall v Motor Trades Association of Australia Superannuation Fund Pty Ltd (No 2)[7] considered the various issues of costs where the court has found in favour of the claimant/plaintiff on the first stage argument but against the claimant/plaintiff on the second stage argument. After referring to relevant authorities there, as well as relevant legislation and rules, Hallen J held that, since the plaintiff had asserted that he was entitled to be paid a TPD benefit and that, in the events that happened, he did not succeed, even though he was successful in having the Court reconsider the matter, it was the case that the defendants incurred costs in resisting a claim for something to which the plaintiff was “not entitled”: at [27]. Furthermore, it was held that it would be “unsatisfactory to attempt to apportion the issues and leave the fixing of costs of those issues to assessment”: at [32].
[7][2014] NSWSC 891.
Outcome
Although I do not intend to recite the very many arguments presented on both sides, I will deal generally with the matters raised.
First, it is clear from the authorities in this State at least that the “event” is much wider than the overall outcome of a case run by a plaintiff. So much is obvious from Murdoch. From time to time, r 684 has been used to permit percentages of costs to be determined to reflect the outcome of particular “questions” or “parts” of a proceeding.
Secondly, when an insurer and, or alternatively, a trustee are, or is, subjected to a “jurisdictional” argument, it is important that the case be adequately particularised: see, for example, Panos v FSS Trustee Corporation.[8]
[8][2015] NSWSC 1217.
Thirdly, if both defendants had been involved in the trial (because an agreement had not been reached between the plaintiff and the first defendant), the plaintiff could not have succeeded against the first defendant at the conclusion of the trial because of the outcome that was, in fact, reached.
Fourthly, despite the fact that some additional costs may have been incurred, the trial itself was unlikely to have taken significantly more time concerning the second defendant’s case than it did if the additional question of the first stage had been agitated as well, because the additional factual background to that would primarily have been related to those documents in existence at the time that the original decision was made.
Fifthly, since the case at trial, with the plaintiff’s agreement, did not run against the trustee, r 700A – even if it were to be otherwise applicable – can only have had little effect where the trial as run was simply against the insurer and where it was late in the proceeding that the first stage allegations were finally clarified.
Sixthly, it was abundantly clear by the time of the second Calderbank offer on 19 February 2016 what the issues were, such that they did justify the plaintiff having to consider that offer seriously.
Seventhly, I accept that the first Calderbank offer was made at a time when events were not as clear cut as they were, later on, a month before the trial started, such that the “all up” offer on the first occasion was not one that could be characterised as an offer that was unreasonably rejected by the plaintiff - whereas the rejection of the offer of $50,000.00 “all up”, relatively close to the beginning of the trial, particularly in circumstances where the plaintiff has been unsuccessful in the way that she has, did involve an unreasonable rejection of that offer.
Eighthly, it was not necessarily open to the plaintiff to proceed only against the second defendant on the basis of s 48A of the Insurance Contracts Act 1984, or even s 55 of the Property Law Act 1994, given, for the former, the remarks made in TAL Life Ltd v Sheutrim; Metlife Insurance Ltd v Sheutrim[9] and given, for the latter, the potential constitutional inconsistency between the Queensland provision and, for instance, specific provisions in the Insurance Contracts Act such as (the then) s 48.
[9][2016] NSWCA 68 at [47]-[57].
Ninthly, since both defendants were represented by the same solicitors and counsel, any costs that were incurred by the first defendant additionally have not been established to be of a significant order, thereby yielding, for the second defendant, the consequence that it did, in reality, incur most of the costs in succeeding to have the plaintiff’s claim dismissed against both defendants by consequence of the judgment against her. Thus, the 10% chosen reflects the necessarily “late” concession on the first stage issue by the second defendant, the plaintiff’s relatively minor “wasted” costs, the plaintiff’s bringing of the case against the first defendant, and the balancing of the costs’ questions against making multiple “assessed” orders (by choosing a percentage).
Tenthly, the evidence of Dr Andrews, even before trial, was not so clear cut in the plaintiff’s favour that it would have changed the court’s opinion about the rejection of the second Calderbank offer being unreasonable.
Eleventhly, forensic decisions about the way the trial was run are really not to the point, since objections to evidence can be made at any time and particular issues can be strongly, or lightly, “pushed”.
Twelthly, it has not been suggested that the period of time that the second Calderbank letter was left open for acceptance was not sufficient for the plaintiff to properly and effectively consider it (with respect to the plaintiff’s prospects of success assessed as at that date).
Accordingly, I made the orders that I did on 24 June 2016 bearing all these particular factors in mind.
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