Ryan v O'Halloran (No 2)
[2021] ACTSC 230
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Ryan v O’Halloran (No 2) |
Citation: | [2021] ACTSC 230 |
Hearing Dates: | 22 July 2021 |
DecisionDate: | 17 September 2021 |
Before: | Loukas-Karlsson J |
Decision: | See [57] |
Catchwords: | COSTS – application for alternate costs order – where plaintiff was successful in one claim but unsuccessful in the other – where plaintiff received offers that exceeded awarded damages – application for set off – enforceable money orders – in the interests of justice to grant set off |
Legislation Cited: | Court Procedure Rules 2006 (ACT) pt 2.10, rr 1603, 1720, 2000 Court Procedures Act 2004 (ACT) s 5A Road Transport (Third-Party Insurance) Regulation 2008 (ACT) (repealed) reg 29 |
Cases Cited: | Calderbank v Calderbank [1975] 3 All ER 33 Cooper v Singh [2017] ACTCA 21 |
Texts Cited: | Gino Dal Pont, Law of Costs (Third Edition, LexisNexis Butterworths, 2013) |
Parties: | Mark Ryan (Plaintiff) Jade O’Halloran (First Defendant) Stephen Cain (Second Defendant) Insurance Australia Limited t/as NRMA Insurance (Third Defendant) |
Representation: | Counsel Self-represented (Plaintiff) William Fitzsimmons SC (Defendants) |
| Solicitors Self-represented (Plaintiff) HWL Ebsworth Lawyers (Defendants) | |
File Number: | SC 312 of 2017 |
LOUKAS-KARLSSON J:
Introduction
The third defendant seeks various costs orders. The plaintiff, who is now unrepresented, resists the costs orders sought.
The plaintiff originally claimed damages arising from five incidents which occurred on the following dates:
(a) 18 January 2012 – the Bunnings Incident (SC 268 of 2017).
(b) 20 January 2013 – MVA 1 (SC 312 of 2017).
(c) 15 January 2014 – the Eastlake Incident (SC 267 of 2017).
(d) 31 August 2015 – MVA 2 (SC 312 of 2017).
(e) 25 January 2018 – MVA 3 (SC 510 of 2018).
The claims the subject of the hearing before the Court occupied over 20 days. On 23 December 2020, I published my judgment: Ryan v Bunnings Group Limited [2020] ACTSC 353 (Ryan v Bunnings). I made orders as to costs, with liberty to apply in respect to any alternate cost orders.
In proceedings SC 312 of 2017, the third defendant seeks a variation of the costs orders, relying upon offers made in the year prior to the commencement of the hearing. At [780] and [782] of Ryan v Bunnings, I made the following cost orders in respect of SC 312 of 2017, with liberty to apply in respect of any alternative cost orders:
(a) In respect of MVA 1: Judgment for the plaintiff in the amount of $11,190 and defendants to pay the plaintiff’s costs.
(b) In respect of MVA 2: Judgment for the defendants and the plaintiff to pay the defendants’ costs.
Plaintiff’s Claims
The relevant claims arose from two motor vehicle accidents MVA 1 and MVA 2. MVA 1 occurred on 20 December 2013 when the plaintiff’s vehicle was struck on the left side at a roundabout of Coranderrk Street and Parkes away by the first defendant. MVA 2 occurred on 31 August 2015 when the plaintiff’s parked vehicle was struck from behind on Mason Street by the second defendant.
The plaintiff claimed damages in respect of each accident in circumstances where the plaintiff was separately claiming damages arising from incidents which occurred before and after the relevant motor vehicle accidents.
The Offers
MVA 1
On 10 April 2018, the defendants made a mandatory final offer (MFO) as required by s 141 of the Road Transport (Third-Party Insurance) Act 2008 (ACT) (repealed) (Third-Party Insurance Act) broken down as follows:
(a) $30,000 for pain and suffering (non-economic loss); and
(b) $28,000 for the balance of the plaintiff’s claim.
On 10 April 2018, the plaintiff, through his legal representative at the time, made a MFO as mandated by s 141 of the Third-Party Insurance Act broken down as follows:
(a) $52,0000 for non-economic loss; and
(b) $198,000 for the balance of the plaintiff’s claim.
MVA 2
On 11 July 2018, the defendants made the following offers:
(a) An offer ‘without prejudice save as to costs’ to resolve the proceedings in the sum of $10,000 plus costs; the offer pursuant to the principles outlined in Calderbank v Calderbank [1975] 3 All ER 33 (Calderbank).
(b) A further offer of compromise pursuant to pt 2.10 of the Court Procedure Rules 2006 (ACT) (Court Procedure Rules) in the sum of $10,000 plus costs.
The Judgment
In considering the plaintiff’s claims, I made findings, including adverse findings concerning the plaintiff’s credibility due to contradictory evidence of the same events from other witnesses and contradictory evidence from contemporaneous records.
MVA 1
In relation to MVA 1, I preferred the evidence of the first defendant regarding the accident and the surrounding circumstances and conversations: Ryan v Bunnings at [304].
I accepted the third defendant’s submission that it was appropriate to award ‘some very small measure of damages’ reflecting general damages for a period of weeks at most, together with out of pocket expenses relating to medical attendances and diagnostic procedures immediately after the accident: Ryan v Bunnings at [309].
I assessed damages as follows:
(a) General damages: $8,500.
(b) Past interest: $1,190.
(c) Medical expenses: $1,500.
MVA 2
In relation to MVA 2, I accepted the evidence of the second defendant. I was not satisfied that the plaintiff suffered any injury arising from the accident and accordingly entered judgment for the defendant: Ryan v Bunnings at [662] and [782].
Third Defendant’s Application for Alternate Costs Order
In respect to MVA 1, the third defendant seeks an order that the plaintiff pay the third defendant’s costs in accordance with s 155(2)(d) of the Third-Party Insurance Act in the sum of $2,500. The third defendant relies upon the MFO served on the plaintiff on 10 April 2018.
In respect to MVA 2, the third defendant seeks an order that the plaintiff pay the third defendant’s costs in the sum of $90,000 pursuant to r 1720 of the Court Procedure Rules.
The defendants also seek an order that the principal judgment in respect to MVA 1 be set off against the orders as to costs the subject of the application pursuant to r 1603 of the Court Procedure Rules.
Legal Principles
The Third-Party Insurance Act provided a structure whereby the parties to a motor accident claim were required to exchange material, engage in a settlement conference, and exchange offers prior to the commencement of proceedings. The Third-Party Insurance Act was repealed by the commencement of the Motor Accident Injuries Act 2019 (ACT) (Motor Accident Injuries Act) on 1 February 2020. Transitional provisions apply.
Part 4.3 of the Third-Party Insurance Act required the parties to a claim to provide documents and information relevant to the determination of liability and quantum. Relevantly, the purpose of pt 4.3 was set out in s 101 as follows:
101Purpose—pt 4.3
The purpose of this part is to put the parties for a motor accident claim in a position where they have enough information to assess liability and quantum for the motor accident claim.
Part 4.7 of the Third-Party Insurance Act required the parties to enter into a form of informal settlement conference (compulsory conference). As a prelude to the compulsory conference, the parties are required to have provided to each other documents relevant to the assessment of the claim: s 141(5).
In the event the claim is not settled at the compulsory conference, pt 4.8 requires the exchange of MFOs. Relevantly, s 141(5) requires a MFO to identify how much of the offer is for non-economic loss.
Section 145(1) of the Third-Party Insurance Act provides a prohibition on the commencement of proceedings whilst a mandatory final offer remains open.
In Mitchell v Australian Capital Territory [2018] ACTSCFC 1; 13 ACTLR 208 (Mitchell) the Full Court discussed the policy considerations relating to these provisions. At [166] Burns J (with whom Wigney J agreed) observed:
…The Act is intended to operate against a backdrop of an existing judicial system, and in particular an existing system of litigation for resolving claims for damages arising from motor accidents. Relevant for present purposes, the Act prescribes certain procedures that are to be complied with before a claim for damages arising from a motor accident may be litigated in the courts. The object of these procedures is to encourage early resolution of motor accident claims.
(emphasis added)
Section 155 mandates orders as to costs in the event the Court awards $50,000 or less in damages. Subsection (5) provides that damages ‘does not include damages for non-economic loss’. Where the Court awards $30,000 or less in damages and the amount awarded is equal to, or less than, the defendant’s MFO, s 155(2)(d) provides that costs must be awarded to the defendant as prescribed by regulation.
In Mitchell at [179] Burns J stated the following with respect of s 155 of the Third-Party Insurance Act:
… This again demonstrates the premium that the legislature has placed on early resolution of small claims. A claimant must approach the resolution of such a claim in the knowledge that a “reasonable offer” on the part of the respondent to settle the claim is to be refused at the claimant’s peril….
(emphasis added)
It was further stated in conclusion at [182]:
(g) one of the primary objects of the Act is to encourage parties to settle motor accident claims without resorting to litigation;
…
(m) an examination of the scheme of the Act regarding the entitlement to costs for parties at various stages of this statutory process reveals that the legislature has within the Act consistently adopted a process of providing incentives to settle claims, and penalties where a claimant unreasonably declines an offer, which are mandatory and set out in the legislation; and
(n) the act differentiates between small claims (mandatory final offers of $50,000.00 or less and damages awards of $50,000.00 or less) with regard to a claimant’s entitlement to costs. Significant penalties apply where claimants refuse a “reasonable” mandatory final offer, even in some cases where they receive more than the offer by way of an award of damages.
(emphasis added)
The third defendant does not rely on the offers made in respect of MVA 2 in seeking to disturb the Court’s order that the plaintiff pay the third’s defendant’s costs. The submission put forward is that the Court should exercise its direction pursuant to r 1720(3) of Court Procedure Rules.
Rule 1720(3) of the Court Procedure Rules provides as follows:
(3) However, instead of assessed costs, the court may order a person liable for costs to pay to the party entitled to costs –
(a) a stated part or percentage of assessed costs; or
(b) assessed costs to or form a stated stage of the proceeding; or
(c) an amount for costs decided by the court; or
(d) an amount for costs to be decided in a way the court directs.
Section 5A of the Court Procedures Act 2004 (ACT) sets out the main purposes of civil procedure provisions. It states the following:
(1) The main purpose of the civil procedure provisions is to facilitate the just resolution of disputes—
(a) according to law; and
(b) as quickly, inexpensively and efficiently as possible.
(2) Without limiting subsection (1), the main purpose includes the following objectives:
(a) the just resolution of the real issues in civil proceedings;
(b) the efficient use of the judicial and administrative resources available for the purposes of the court;
(c) the efficient disposal of a court’s overall caseload;
(d) the timely disposal of civil proceedings;
(e) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
(3) The civil procedure provisions must be interpreted and applied, and any power or duty imposed by them (including the power to make rules) must be exercised or carried out, in the way that best promotes the main purpose.
(4) The parties to a civil proceeding must help the court to achieve the objectives.
In Cooper v Singh [2017] ACTCA 21 the Court of Appeal stated at [14] that orders for costs are made in the exercise of the Court’s discretion with the overriding purpose of reaching a ‘fair and just result’. The High Court in Gray v Richards (No 2) [2014] HCA 47; 315 ALR 1 stated at [2]:
The disposition of costs is within the general discretion of the Court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the Court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.
I note that indemnity costs are not sought: see Stewart v Atco Controls Pty Ltd (in liq)(No 2) [2014] HCA 31; 88 ALJR 811 at [4]; WSA Online Limited v Arms (No 2) [2006] FCAFC 108 at [16].
Plaintiff Submissions
In oral submissions, the plaintiff accepted that the third defendant did make offers to the plaintiff’s legal representatives. The plaintiff disputed having been made informed of the offers by his previous legal representatives. The plaintiff emphasised that the offer was made in 2017 which was two years prior to the commencement of the litigation. The plaintiff noted that originally the estimate of the hearing was two weeks and it ended up occupying over 20 court days. It was submitted that if an offer was made when the plaintiff had a better appreciation of the duration of the matter, it may have led to a different outcome (T3.20-45).
The plaintiff also noted that there had been a provision of a considerable number of extra expert reports for the hearing and that this had not been known at the time when the offer was made (T4.31-36).
The plaintiff handed up a copy of the chapter titled ‘Costs Consequences of Rejected Settlement Offers’ from G E Dal Pont, Law of Costs (Third Edition, LexisNexis Butterworths 2013). The plaintiff submitted that the chapter established the Court has a broad discretion in terms of cost orders (T4.11-13).
Consideration
MVA 1
The third defendant seeks an order pursuant to s 155(2)(d) of the Third-Party Insurance Act that the costs of the proceedings be awarded to the third defendant as prescribed by the regulation. The regulation provides that costs be awarded in the sum of $2,500: reg 29 Road Transport (Third-Party Insurance) Regulation 2008 (ACT) (repealed) (Third-Party Insurance Regulation). The Third-Party Insurance Regulation was also repealed by the commencement of the Motor Accident Injuries Act on 1 February 2020.
Regulation 29 of the Third-Party Insurance Regulation states the following:
29Costs—small awards of damages—Act, s 155 (2) (d)
Costs awarded to a respondent under the Act, section 155 (2) (d) must—
(a)if the amount of the court order is at least 15% less than the amount of the claimant’s mandatory final offer—
(i)be worked out on a party and party basis; and
(ii)not exceed $2 500; or
(b)in any other case—be $0.
(emphasis added)
The third defendant’s MFO in relation to MVA 1 offered $28,000 for damages. This exceeded the award of the Court: reg 29 Third-Party Insurance Regulation.
Section 155 of the Third-Party Insurance Act mandates the order being made if the relevant preconditions are met. The exception provided in s 156(5) does not apply in the present matter.
The third defendant assessed their costs in respect of MVA 1 in the amount of $196,665.42, in excess of the maximum permissible costs of $2,5000 in accordance with reg 29 of the Third-Party Insurance Regulation.
In the circumstances, it is appropriate that I order that the plaintiff pay the defendants’ costs in the sum of $2,5000 in accordance with s 155(2)(d) of the Third-Party Insurance Act and r 1720 of the Court Procedure Rules.
MVA 2
Seven months prior to the commencement of the hearing the defendants offered to settle the plaintiff’s claim for the sum of $10,000, plus costs to be agreed or assessed. Following the hearing, I was not satisfied that the plaintiff suffered any injury arising from MVA 2. I found that the plaintiff lacked credibility in relation to the circumstances of the accident.
At the time the offer was made, the defendants’ case was made clear to the plaintiff. I note the contents of the Calderbank letter dated 11 July 2018:
…there are significant credibility issues with your client’s version of events, his reporting of his alleged loss of earning capacity, and his reporting of his alleged injuries and disabilities.
As you know, we feel your client will face significant difficulties establishing that he sustained any injuries in the subject accident on 30 August 2015, or in the alternative, (if he did suffer injuries), that he continues to suffer from any disabilities as a consequence of those injuries.
The third defendant has incurred significant costs in defending the plaintiff’s unsuccessful claim.
I accept that if an order is not made as sought pursuant to r 1720 of the Court Procedure Rules, the third defendant will be subjected to the additional expense of an assessment process.
I will make an order not for the amount sought, but for a lesser amount that I consider appropriate in the circumstances of this case. That is $60,000.
The Set Off Application
Pursuant to the cost orders I made on 23 December 2020, the defendants are liable to the plaintiff in respect to MVA 1 for the judgment sum of $11,190. The defendants submitted that in the event their applications as to costs were successful, the plaintiff will be indebted to the defendants as follows:
(a) MVA 1: $2,500.
(b) MVA 2: the amount as determined by the Court, that is, $60,000.
Accordingly, the plaintiff will be indebted to the defendants for an amount exceeding the judgment in favour of the plaintiff.
The defendants submitted that the plaintiff’s evidence at the hearing is that he:
(a) Declared bankruptcy in 2016;
(b) Had financial difficulties; and
(c) Had difficulty maintaining his employment and business.
The defendants further submitted that in the circumstances, the Court would be satisfied that there is no real prospect of the defendants recovering their costs arising from the proceedings.
Relevantly, r 1603 of the Court Procedure Rules provides as follows:
1603Orders—set off between enforceable money orders
(1)This rule applies if, in relation to 2 or more money orders of the same court, the enforcement creditor and the enforcement debtor under 1 or more of the orders are the enforcement debtor and enforcement creditor, respectively, under the other orders.
NoteEnforceable money order, enforcement creditor and enforcement debtor are defined in r 2000 (Definitions—pt 2.18).
(2)The enforcement debtor under an enforceable money order made in a proceeding (the first order) may apply to the court for an order in the proceeding that the first order be set off against another enforceable money order of the same court (the second order) in which the enforcement debtor is the enforcement creditor.
NotePt 6.2 (Applications in proceedings) applies to an application for an order under this rule.
(3)If the court makes an order under this rule—
(a)if the amount of the first order is less than the amount of the second order—the first order is taken to have been satisfied and the amount of the second order is taken to have been reduced by the amount of the first order; or
(b)if the amount of the first order is equal to the amount of the second order—both orders are taken to have been satisfied; or
(c)if the amount of the first order is greater than the amount of the second order—the second order is taken to have been satisfied and the amount of the first order is taken to have been reduced by the amount of the second order.
Rule 1603 of the Court Procedure Rules applies if there are 2 or more money orders of the same Court. Therefore, it applies in this case.
Rule 2000 of the Court Procedure Rules defines an enforceable money order as a money order of the court. Rule 2000 further defines a money order as an order of a court for the payment to a person of an amount, including an amount for damages, whether or not the amount is or includes an amount for interests or costs.
The orders as to damages and costs within the present matter are enforceable money orders for the purposes of r 1603 of the Court Procedure Rules.
Rule 1603(3)(a) applies as the amount of the first order (the judgment in favour of the plaintiff of $11,190) is less than the amount of the second order (being the costs orders in favour of the defendants). The first order (the judgment sum) will be taken to have been satisfied and the amount of the second order (the costs orders) will be taken to have been reduced by the amount of the first order.
The defendants submitted that in light of s 5A of the Court Procedures Act, the Court would conclude that it is in the interest of justice that an order for set off be made in the terms sought.
I am satisfied that it is in the interests of justice that an order for set off be made in the terms sought.
Orders
In lieu of the orders made on 23 December 2020, I make the following orders.
(a) With respect to MVA 1, I order that the plaintiff pay the defendants costs in the sum of $2,500 in accordance with s 155(2)(d) of the Third-Party Insurance Act.
(b) With respect to MVA 2, I order that the plaintiff pay the defendants costs in the sum of $60,000.
(c) I grant the set off application such that the judgment for $11,190 will be set off against the cost orders for $62,500.
| I certify that the preceding fifty-seven [57] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Loukas-Karlsson Associate: Rhiannon McGlinn Date: 17 September 2021 |
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