Stewart v Metro North Hospital and Health Service [No 2]
[2024] QCA 247
•6 December 2024
SUPREME COURT OF QUEENSLAND
CITATION:
Stewart v Metro North Hospital and Health Service [No 2] [2024] QCA 247
PARTIES:
MICHAEL STEWART by his litigation guardian CAROL SCHWARZMAN
(appellant)
v
METRO NORTH HOSPITAL AND HEALTH SERVICE
(ABN 184 996 277 942)
(respondent)FILE NO/S:
Appeal No 4488 of 2024
SC No 4665 of 2024DIVISION:
Court of Appeal
PROCEEDING:
General Civil Appeal – Further Orders
ORIGINATING COURT:
Supreme Court at Brisbane – [2024] QSC 41 (Cooper J)DELIVERED ON:
6 December 2024
DELIVERED AT:
Brisbane
HEARING DATE:
Heard on the papers
JUDGES:
Mullins P and Boddice JA and Ryan J
ORDERS:
1. The appellant pay the respondent’s costs of the appeal, to be assessed on the standard basis up to and including 13 August 2024 and thereafter on the indemnity basis.
2. Each party pay its own costs of the cross-appeal.
CATCHWORDS:
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where it was ordered that the appellant’s appeal and the respondent’s cross-appeal each be dismissed – where the respondent made a Calderbank offer on 12 August 2024 to settle the appeal, the cross-appeal, notices of contention and a separate appeal as to costs – where the appellant rejected that offer and made a counter-offer for significantly higher damages – where the judgment sum was less than the respondent’s Calderbank offer – whether the decision to reject the Calderbank offer was unreasonable or imprudent
J & D Rigging Pty Ltd v Agripower Australia Ltd[2014] QCA 23, applied
Sultana Investments Pty Ltd v Cellcom Pty Ltd (No 2) [2009] 2 Qd R 287; [2008] QCA 398, citedCOUNSEL:
B W Walker SC and G R Mullins KC, with J J Liddle, for the appellant
C C Heyworth-Smith KC, with K E Slack and M A Eade, for the respondentSOLICITORS:
Maurice Blackburn for the appellant
Corrs Chambers Westgarth for the respondent
THE COURT: On 15 November 2024, it was ordered that the appellant’s appeal and the respondent’s cross-appeal (“the appeals”) each be dismissed (subject to an agreed correction to the calculation of the damages award).[1] The parties were invited to file and serve written submissions as to costs of the appeals.
[1]Stewart v Metro North Hospital and Health Service [2024] QCA 225.
The appellant submits that as each party had some success and the appeals were inter-related, the appropriate costs order is that each party pay 50 per cent of the other party’s costs of the appeals.
The respondent submits that having regard to the terms of a Calderbank offer it made on 12 August 2024, the appellant ought to pay the respondent’s costs of the appeals, on the indemnity basis, or alternatively, on the standard basis.
The respondent’s Calderbank offer to the appellant offered to settle the appeal, the cross-appeal, notices of contention and a separate appeal as to costs[2] (the costs appeal) on the basis that the respondent pay to the appellant, damages (including fund management fees) of $2,615,000, together with the appellant’s standard costs of sanction and of the appellate proceedings, and the respondent discontinue the costs appeal, with no order as to costs. The costs appeal was a separate appeal by the respondent in which judgment was given at the same time.
[2]Metro North Hospital and Health Service v Stewart [2024] QCA 226.
The Calderbank offer was stated to be open for acceptance to 22 August 2024. One day later, on 13 August 2024, the appellant rejected that offer and made a counter-offer, on the same terms as to costs and sanction, but for a damages figure (including fund management fees) of $5,850,000. That offer was re-opened by the appellant after the hearing of the appeal, on 23 August 2024.
The principles relevant to the awarding of costs are not in dispute. It is accepted that the Calderbank offer is a relevant factor. Ultimately, the question is whether the rejection of that offer was unreasonable or imprudent.[3]
[3]J & D Rigging Pty Ltd v Agripower Australia Ltd [2014] QCA 23 at [5]–[6].
In J & D Rigging Pty Ltd, a non-exhaustive list of factors was said to be relevant to an assessment of whether a rejection was unreasonable or imprudent. That list was:
(a)The stage of the proceeding at the time of the offer;
(b)The time allowed to consider the offer;
(c)The extent of the compromise offered;
(d)The offeree’s prospects of success (at the date of the offer);
(e)The clarity of the terms of the offer;
(f)Whether the offer foreshadowed an application for indemnity costs in the event of its rejection; and
(g)A further relevant factor was whether there would be a stultification of the law, having regard to the issues raised by the appeal.
In the present case, the Calderbank offer was made 11 days prior to the listed date for the hearing of the appeals. It was for a sum that was approximately $340,000 more than the judgment sum. Had the offer been accepted, it would have resolved all issues between the parties. Importantly, the appellant would have received his standard costs of the appeals. It was foreshadowed that the offer would be relied upon in support of an application for indemnity costs.
The appellant submits the offer did not involve a reasonable compromise. The damages figure offered represented only a modest increase, in circumstances where the central issue at the hearing of the appeal was that damages ought to have been assessed at more than double that awarded at trial. That being so, it was not unreasonable for the appellant to refuse that offer.
We do not accept that submission. It was unreasonable for the appellant to refuse the offer. The offer represented a genuine compromise, offering both an increased sum by way of damages, as well as costs of the appeals. Further, at the time the offer was made, all written submissions had been filed so that a proper assessment could be made by the appellant, of prospects of success.
Whilst the refusal of a Calderbank offer does not, of itself, warrant the ordering of indemnity costs, the making of such an offer is a relevant factor in determining whether to award indemnity costs as an incentive to parties to consider seriously offers to settle, which are reasonably made.[4]
[4]Sultana Investments Pty Ltd v Cellcom Pty Ltd (No 2) [2009] 2 Qd R 287.
In our view, such an award is properly to be made in the present case. The unreasonable refusal of the offer led to a hearing where the appellant achieved an outcome significantly less favourable, even taking into account that the appellant received a costs order in his favour in the costs appeal rather than the proposed order in the Calderbank offer for no order as to costs of the costs appeal.
However, the timing of the offer is relevant to a determination of when the award of indemnity costs ought to commence. By the time the Calderbank offer was made, the substantive costs of the appeal had largely been incurred by the parties.
Balancing all of the relevant factors, we would order that the appellant pay the respondent’s costs of the appeal, to be assessed on the standard basis, up to and including 13 August 2024 and on the indemnity basis thereafter.
We would order that each party bear its own costs of the cross-appeal. That order properly balances the fact that that appeal was dismissed, against the unreasonableness of the appellant’s refusal of the Calderbank offer, which included a compromise of all of the appellate proceedings, on the basis of a costs order in the appellant’s favour.
Orders
The orders of the Court are:
1.The appellant pay the respondent’s costs of the appeal, to be assessed on the standard basis up to and including 13 August 2024 and thereafter on the indemnity basis.
2.Each party pay its own costs of the cross-appeal.
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