Schofield v Hopman (No 2)

[2017] QSC 324

SUPREME COURT OF QUEENSLAND

CITATION:

Schofield v Hopman & Anor (No 2) [2017] QSC 324

PARTIES:

PETER MICHAEL SCHOFIELD

(Plaintiff)

v

GARY HOPMAN

(First Defendant)

AND

QBE INSURANCE (AUSTRALIA) LIMITED (ABN: 78 003 191 035)
(Second Defendant)

FILE NO/S:

S8 of 2016

DIVISION:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court at Mackay

DELIVERED ON:

20 December 2017

DELIVERED AT:

Rockhampton

HEARING DATE:

On the papers – last submission received on 15 December 2017.

JUDGE:

McMeekin J

ORDER:

The plaintiff pay the Defendants’ costs on the standard basis.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – RELEVANT CONSIDERATIONS GENERALLY – where there was judgment for the defendant – where the parties agree that the plaintiff must pay the defendants’ costs – where the offer by the defendants was more favourable than the outcome at trial – where the parties disagree on whether the costs should be on the indemnity basis for the period after the offer of settlement was made – whether costs should be awarded on an indemnity or standard basis

Uniform Civil Procedure Rules 1999 (Qld), r 360, r 361, r 689

2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS 39149 (No 2) [2016] QSC 65, cited
Anderson v AON Risk Services Australia Ltd [2004] QSC 180, cited
Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353, cited
Colgate Palmolive Company & Anor v Cussons Pty Limited [1993] FCA 536, cited
Emanuel Management Pty Ltd (in liq) v Foster’s Brewing Group Ltd [2003] QSC 299, cited
Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] 13 VR 435, cited
Mott v Philip & Ors; Prosser v Philip & Ors (No2) [2017] QSC 255, cited
Mizikovsky v Queensland Television Ltd [2014] 1 Qd R 197, cited
Rathie v ING Life Ltd [2004] QSC 146, cited

COUNSEL:

C C Heyworth-Smith QC with M X Kehoe for the Plaintiff

R C Morton for the Defendant

SOLICITORS:

SR Wallace & Wallace for the Plaintiff

Curwoods Lawyers for the Defendant

1. McMeekin J: I delivered reasons in this matter on 8 December 2017. I gave judgment for the defendants, so dismissing the plaintiff’s claim. I assessed damages in the sum of $760,553.68. The question of the appropriate costs order remained outstanding. The parties have now filed their submissions.

1. The parties agree that the plaintiff must pay the defendants’ costs but disagree on whether the costs should be on the indemnity basis for the period after an offer of settlement was made by the defendant.

1. The offer by the defendants was that the plaintiff should accept in full satisfaction of his claim the sum of $70,011 plus standard costs. The offer was made on 18 October 2016 and pursuant to r 361 Uniform Civil Procedure Rules 1999 (Qld). That rule provides:

Costs if offer by defendant

(1)This rule applies if—

(a)the defendant makes an offer that is not accepted by the plaintiff and the plaintiff does not obtain an order that is more favourable to the plaintiff than the offer; and

(b)the court is satisfied that the defendant was at all material times willing and able to carry out what was proposed in the offer.

(2)Unless a party shows another order for costs is appropriate in the circumstances, the court must—

(a)order the defendant to pay the plaintiff’s costs, calculated on the standard basis, up to and including the day of service of the offer; and

(b)order the plaintiff to pay the defendant’s costs, calculated on the standard basis, after the day of service of the offer.

(3)However, if the defendant’s offer is served on the first day or a later day of the trial or hearing of the proceeding then, unless the court otherwise orders—

(a)the plaintiff is entitled to costs on the standard basis to the opening of the court on the next day of the trial; and

(b)the defendant is entitled to the defendant’s costs incurred after the opening of the court on that day on the indemnity basis.

(4)If the defendant makes more than 1 offer satisfying subrule (1), the first of those offers is taken to be the only offer for this rule.

1. Here the plaintiff failed to obtain any judgment in his favour. It has been held that in those circumstances the rule does not apply: see Emanuel Management Pty Ltd (in liq) v Foster’s Brewing Group Ltd[1]; Rathie v ING Life Ltd[2]; Anderson v AON Risk Services Australia Ltd.[3]

   [1][2003] QSC 299 at [36] per Chesterman J.

   [2][2004] QSC 146 at [46]–[57] per Wilson J.

   [3][2004] QSC 180 at [10] per P McMurdo J.

1. Nonetheless it is relevant to note that under the terms of the Rule the defendant does not obtain indemnity costs as of right – to obtain an order on the indemnity basis the defendant must show that “another order for costs is appropriate in the circumstances”. Clearly the legislature drew a distinction between the plaintiff’s position under r 360 (where indemnity costs for the whole of the proceedings is the default position) and the defendant’s position under r 361.

1. If the rule does not apply then costs are in the discretion of the Court. Rule 689 applies. It provides —

General rule about costs

(1)            Costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court considers another order is more appropriate.

(2)            Subrule (1) applies unless these rules otherwise provide.

1. It is a well-accepted that where there has been an imprudent rejection of an offer that may provide a ground on which to award indemnity costs: Colgate Palmolive Company & Anor v Cussons Pty Ltd[4].  I was referred to my own decision in Mott v Philip & Ors; Prosser v Philip & Ors (No2)[5] and Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No2)[6] as to the applicable principles.

   [4] [1993] FCA 536 at [24].

   [5][2017] QSC 255.

   [6] [2005] 13 VR 435 at 442 [25].

1. The defendants argue that the rejection of their offer was imprudent in the circumstances. The defendants point out:

   (a)        That at the time of the offer the plaintiff was well appraised of the defendants’ position, the offer coming after a compulsory conference and a mediation;

   (b)        14 days was allowed to consider the offer – a reasonable time;

   (c)        The extent of the compromise was substantial (including an offer of damages and standard costs) given the absence of any realistic prospect of success.

   (d)        The lack of prospects should have been evident given that the only admissible evidence directly bearing on the cause of the accident came from the plaintiff and Mr Hopman. Their versions (as given to the investigating police officer) substantially agreed. To avoid the effect of his confession the plaintiff attacked the integrity of the investigating police officer;

   (e)        The terms of the offer were clear.

2. The plaintiff disputes the points made in (c) and (d) above. In addition the plaintiff argues that indemnity costs should not be awarded because:

   (a)        He has been left with significant physical injuries and has suffered substantial financial loss and hardship as a result of the subject accident;

   (b)        Because of those injuries and his reaction to them he lost his partner of 28 years;

   (c)        He was represented by counsel and solicitors on a speculative basis which can inform the Court as to how realistic his prospects of success appeared to those familiar with his case.

Discussion

1. The granting of costs on an indemnity basis should be reserved “for unusual cases or cases involving unreasonable conduct” established on “clear grounds”: Mizikovsky v Queensland Television Ltd[7]; Chaina v Alvaro Homes Pty Ltd[8]; 2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS 39149 (No 2)[9].

   [7][2014] 1 Qd R 197.

   [8][2008] NSWCA 353 at [113].

   [9][2016] QSC 65.

1. There are two significant points to consider. The first is – how unreasonable was it to reject the offer? The second is - should the personal circumstances of an individual plaintiff impact on the decision?

1. No authority is cited for the proposition that costs orders should be influenced by personal circumstances, such as financial hardship or the failure of a long term relationship. I do not think that those circumstances can have much weight.

1. As to the first point, the amount offered by the defendants was not substantial in the context of the damages – about 9% of the assessed damages. Plainly enough the offer was pitched at a commercial level.

1. The issue really is whether in a middle of the road collision case a plaintiff who contends that the other driver did not keep as far left as practicable is to suffer indemnity costs as the penalty if offered a fraction of their damages and he or she subsequently loses the contest. Here the plaintiff was supported to a degree by two witnesses. As well the plaintiff’s own observation was that the defendant did not move off the road – as he told the police officer. Obviously I found against him as to the accuracy of his observation but I did not find that he was dishonest in that recollection. It is difficult in those circumstances to hold that the plaintiff was imprudent in his rejection.

1. To an extent I am influenced by the way that a defendant’s offer is treated under r361. The mere bettering of an offer was not sufficient in the eyes of the legislature to justify the granting of indemnity costs in favour of a defendant. I am conscious of the distinguishing point – that where the plaintiff succeeds to a degree then the defendant’s conduct has necessitated the proceedings. But it seems hard that where success even to a minimal level would have resulted, in the usual course, in a standard costs order that the result should be so different given the nature of the contest (a middle of the road case) and the nominal damages offered.

1. In my view the order should be that the plaintiff pay the defendants’ costs on the standard basis.