Thompson v Desmond
[2016] ACTSC 214
•1 August 2016
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Thompson v Desmond |
Citation: | [2016] ACTSC 214 |
Hearing Date: | 1 August 2016 |
DecisionDate: | 1 August 2016 |
Before: | Mossop AsJ |
Decision: | See [63] |
Catchwords: | APPEAL – Appeal from decision of Magistrates Court – Magistrate’s decision involved review of Deputy Registrar’s assessment of costs – Whether Magistrate erred in failing to determine point of principle raised by plaintiff in the review PROCEDURE – COSTS – Appeal from decision of Magistrates Court – Magistrate’s decision involved review of Deputy Registrar’s assessment of costs – Assessment of costs following consent judgment – Where plaintiff rejected mandatory final offer – Where consent judgment made in same terms a mandatory final offer – Bill of costs – Defendants objected to costs claimed after making of mandatory final offer – Whether those costs were fair and reasonable for the attainment of justice – Court Procedures Rules 2006 (ACT), r 1751(2) – Deputy Registrar does not have power to reduce costs that are otherwise fair and reasonable by having regard to the terms of a mandatory final offer |
Legislation Cited: | Court Procedures Rules 2006 (ACT), rr 1751(2), 1761, 1852, 1855, 6251, 6252, 6253 Magistrates Court Act 1930 (ACT), s 274 |
Cases Cited: | Biernacki v Klenka (1988) 80 ACTR 1 Brennand v Hartung and Best Practice Education Group Ltd [2014] ACTSC 326 |
Parties: | Justin Thompson (Appellant) Mary Desmond (Respondent) Insurance Australia Limited (Second Respondent) |
Representation: | Counsel Mr R Crowe SC (Appellant) Ms M Castle (Respondents) |
| Solicitors Maliganis Edwards Johnson (Appellant) Sparke Helmore (Respondents) | |
File Number: | SCA 111 of 2015 |
Decision under appeal: | Court: Magistrates Court of the Australian Capital Territory Before: Magistrate Morrison Date of Decision: 15 December 2015 Case Title: Thompson v Desmond & Insurance Australia Ltd Court File Number: CS 219 of 2012 |
MOSSOP AsJ:
This is an appeal from the Magistrates Court. It is brought as of right under s 274(2)(b)(ii) of the Magistrates Court Act 1930 (ACT). The underlying dispute is one about the assessment of costs recoverable by a plaintiff in proceedings pursuant to a consent judgment dated 10 December 2013. The appellant was the plaintiff below. The respondents were the defendants. I will refer to the parties as plaintiff and defendants respectively.
The principles to be applied are uncontroversial and were identified in Urbaniak-Bak v Prail [2014] ACTSC 171 at [51]-[53].
Background
The proceedings brought by the plaintiff were proceedings claiming damages for personal injury arising out of a motor vehicle accident.
On 4 July 2013 the defendants had made a mandatory final offer pursuant to the provisions of the Road Transport (Third Party Insurance) Act 2008 (ACT) (Third Party Insurance Act) to settle proceedings for $70,000 plus costs.
On 21 November 2013 the defendants made a Calderbank offer offering to settle the proceedings for $70,000 plus costs. An offer to that effect was ultimately accepted by the plaintiff. The matter was resolved by the making of consent orders. Orders 1 and2 of the orders dated 10 December 2013 provided:
1. Judgment be entered for the plaintiff for $70,000
2. The defendants pay the plaintiff’s costs to be agreed or assessed.
It will be observed that the judgment given was, in substance, the same as that offered some five months earlier in the mandatory final offer.
On 29 August 2014 the plaintiff filed a bill of costs. In response, the defendants filed a notice of objection. The notice articulated a number of general objections to the costs itemised in the bill of costs. The two relevant general objections may be summarised as follows:
(a)Objection 5 contested all of the costs claimed by the plaintiff after 4 July 2013 being the date upon which the defendants made the mandatory final offer of $70,000 plus costs.
(b)Objection 6 contested the costs of an economic loss report which had been prepared by Macquarie Reporting Services.
The terms of objection 5 set out the various offers that had been made as between the parties, including the mandatory final offer of $70,000 plus costs and disbursements made by the defendants on 4 July 2013. It stated that the offer accepted five months later was the same amount as the mandatory final offer. It pointed out that the total costs claimed from the date of the offer on 4 July 2013 to the conclusion of the matter was $41,089.60. It then stated:
The Defendants submit that the costs claimed after 4 July 2013 failed to satisfy the requisite test of being costs that were fair and reasonable to the attainment of justice and consequently should be disallowed.
It should be noted that the objection was one put at a high level of generality which compared the outcome achieved to the outcome offered and contended that, by reason of that fact, the costs incurred after 4 July 2013 did not meet the test of being “fair and reasonable to the attainment of justice”.
The general objection made in objection 5 was in addition to a large number of specific more conventional objections to work done after the date of the mandatory final offer which were set out in the notice of objection (see objections 94 ff)
The assessment was listed for hearing before a senior deputy registrar of the Magistrates Court on 30 October 2014. I will refer to the Senior Deputy Registrar as the Registrar. After some oral submissions the Registrar ordered the parties to file and serve written submissions relating to objections 5 and 6. The parties then filed written submissions.
On 17 February 2015 the Registrar gave an oral decision rejecting objections 5 and 6. He asked whether the parties required written reasons and the defendants sought written reasons which were given by the Registrar on 13 March 2015. I observe that it was not necessary for the Registrar to provide written reasons having regard to the capacity for a party to seek reconsideration of the decision, which itself incorporated the requirement to give reasons: see r 1852 of the Court Procedures Rules 2006 (ACT) (Rules). The defendants did seek reconsideration of the decision which led to a further exchange of written submissions and further written reasons which were given on 23 September 2015.
The defendants then sought review of the decision of the Registrar pursuant to r 1855. Yet more written submissions were exchanged and the review heard by the Magistrate on 1 December 2015. The defendants briefed counsel to argue the appeal and the plaintiff briefed senior counsel. His Honour delivered a written decision on 15 December 2015. The effect of his Honour’s decision was to set aside the decision of the Registrar in relation to objections 5 and 6 and remit the assessment back to the Registrar. The Magistrate ordered the plaintiff to pay the defendants’ costs of the application for review. The plaintiff does not challenge his Honour’s decision in relation to objection 6, but does challenge the decision in relation to objection 5.
The legal resources that have been devoted to the two objections have been significant. The submissions of the parties and the reasons given in the proceedings to date may be summarised as follows.
Before the Registrar:
(a)Oral submissions at assessment on 30 October 2014;
(b)The defendants’ submissions dated 20 November 2014 (8 pages);
(c)The plaintiff’s submissions (undated) (3 pages);
(d)The defendants’ submissions dated 27 January 2014 (2 pages);
(e)The defendants’ further submissions dated 2 February 2015 (1 page); and
(f)Reasons for the decision of the Registrar dated 13 March 2015 (4 pages).
Reconsideration before the Registrar:
(a)The defendants’ amended those for reconsideration of costs assessment dated 27 March 2015 (10 pages);
(b)The plaintiff’s reply to statement of objection for costs assessment dated 14 April 2015 (9 pages);
(c)The defendants’ response to the plaintiff’s reply to the notice of objections to the application for review of the registrar’s decision (undated) (9 pages);
(d)The Registrar’s interim decision dated 9 July 2015 (1 page); and
(e)The Registrar’s decision on reconsideration (undated) (4 pages).
Appeal proceedings in Magistrates Court:
(a)The defendants’ outline of argument dated 13 November 2015 (6 pages plus annexures;
(b)The plaintiff’s outline of argument dated 30 November 2015 (4 pages);
(c)The oral argument before the Magistrate on 1 December 2015 (42 pages of transcript); and
(d)The reasons for the decision given by the Magistrate on 15 December 2015 (10 pages, 49 paragraphs).
It will be apparent that the litigious energy that was saved through the settlement of the proceedings has now been more than completely expended in relation to the arguments on costs.
Grounds of appeal
The appellant’s notice of appeal identifies 4 grounds of appeal.
Ground 1 is that his Honour erred in setting aside the Deputy Registrar’s decision in so far as it related to objection 5.
Grounds to 2, 3 and 4 each challenge the decision by his Honour to remit objection 5 for further assessment in circumstances where the objection was a global one (ground 2), did not relate to individual items (ground 3) and where his Honour had held that it was not permissible to take account of the ultimate settlement of the matter (ground 4).
Short answer
While it must be recognised that some of the significant devotion of legal resources to two objections, in what would otherwise be a simple costs assessment of a modest personal injury matter related to the question no longer in dispute, namely, the approach to be taken to the general objection to the Macquarie Reporting Services report, this case has involved accretions of submissions and decisions which make it easy to lose sight of the relatively straightforward issue of principle which was raised by the defendants’ objection.
In my view it is useful to attempt to clearly articulate the question of principle raised by the defendants and articulate the relatively straightforward answer before attempting to cut the Gordian knot created by the three previous levels of judicial consideration of this issue.
The point raised by the defendants’ objection was that the defendants had made a mandatory final offer on for July 2013. The plaintiff did not accept that offer. Some five months later the parties agreed to settle proceedings for the same amount as had been offered in the mandatory final offer. The plaintiff claimed some $41,089.60 for legal costs during that five month period. The defendants submitted that the costs claimed after 4 July 2013 failed to satisfy the requisite test of being costs that were fair and reasonable for the attainment of justice and consequently should be disallowed.
In other words, notwithstanding that the defendants had consented to an order that they pay the plaintiff’s costs on a party and party basis for the whole of the proceedings, it submitted that in undertaking the costs assessment, costs consequences should flow from the making and non-acceptance of the mandatory final offer by a finding that because the same judgment amount had been previously offered, the costs incurred after that date were not “fair and reasonable for the attainment of justice or for enforcing … the rights of the party whose costs are being assessed” for the purposes of r 1751(2). While the plaintiff contended that this was seeking to inappropriately reopen the costs order to which the defendants had consented, the defendants expressly disavowed any such intention, but contended that it was open to accept its submission within the scope of the rules relating to assessment of costs and within the scope of the existing costs order.
It is important to note that the objection was taken at the level of general principle based on the comparison between the offer made and the judgment amount. There was, for example, no suggestion that the plaintiff had intended to accept the defendant’s mandatory final offer, but chosen to run up additional legal costs before doing so. At the level of general principle at which the objection was taken the question raised and the appropriate answer can be articulated as follows.
Question: In circumstances where a case has settled on terms equivalent to terms offered in a mandatory final offer and the costs order made by the Court is that the defendant pay the plaintiff’s costs, is it open to find upon assessment that the costs incurred after the mandatory final offer were not “fair and reasonable” because the proceedings were settled by a judgment no more favourable to the plaintiff than had earlier been offered?
Answer: In circumstances where the plaintiff has not accepted the mandatory final offer, it is not open to a registrar, assessing costs on a party and party basis to reduce the costs that otherwise would be determined to be fair and reasonable by taking account of the fact that the proceedings ultimately settled for an amount no more favourable to the plaintiff than was offered as part of the mandatory final offer. If effect is to be given to a mandatory final offer then it must be given by the Court when determining what the appropriate costs order should be.
Reasons: It is unsurprising that the defendants pointed to no authority that supported the position for which they contended. If the submission made by the defendants was correct then it would mean that registrars were required to routinely make assessments based on settlement offers that would have the effect, as a matter of substance, of reopening the general question of costs that had already been determined by the Court. Registrars would be obliged to do so even in circumstances where, as here, the costs order had been consented to or the Court had itself considered the effect of settlement offers before making the relevant costs orders.
In so far as the mandatory final offer is a statutory concept, the relevant provisions dealing with the non-acceptance of such an offer have changed over time. If because the accident occurred in 2009 the relevant provision was s 144 of the Third Party Insurance Act, because of the magnitude of the judgment entered, that section does not have effect in the circumstances of this case. If the current provision is relevant then that is s 156A. Under that provision effect is not given to a mandatory final offer as part of the costs assessment process. Instead the section gives it effect at the point where the Court is deciding what costs order should be made. The Rules do not give power to the Registrar to exercise the powers of the Court under s 156A: see rr 6251-6253. Thus if the relevant provision is s 144, that is effectively neutral as to whether or not the Court or the assessing officer may give effect to the offer. Section 156A on the other hand is inconsistent with statutory effect being given to the offer as part of the costs assessment process.
To the extent to which a mandatory final offer has non-statutory effect in the same manner that a Calderbank offer has effect (a point which I do not decide), then the parties have not identified any authority which has extended Calderbank principles to the discretion of a registrar even if the words used in the Rules (in particular rr 1751 and 1761) might, unconstrained by their context, be broad enough to encompass consideration of the same issues. That is fundamentally because a party who seeks that some consequences flow from the non-acceptance of an offer of settlement has the opportunity to make that submission at the point when the question of costs is considered by the Court. The rules relating to assessment occur in the context of a costs order having been made and hence the words used must be read more narrowly than an unconstrained reading might otherwise suggest. While an unconstrained reading of the words might suggest that what was fair and reasonable was at large in the same way that the discretion in relation to costs is at large, in the context in which they occur the words do not have the effect of reopening the costs discretion of the Court but have a narrower operation relating to the detail of the costs and disbursements incurred in order to prepare for and conduct a hearing of the proceedings. In that context it is not open to take into account the existence of a Calderbank offer for the purposes of cutting back what would otherwise be the entitlement of a party flowing from the costs order which is being assessed. It is for that fundamental reason that the defendants objection could not succeed.
Acceptance of the defendants’ submission would have the effect of undermining not only the operation of Calderbank offers, but also the current provisions of the rules relating to offers of compromise. The rules relating to offers of compromise only came into effect after the settlement of the case, but it is worth considering the consequences of the defendants’ argument for the operation of those rules. While there is inevitably some uncertainty as to the effect of costs orders included in settlement offers and offers of compromise, the extent of uncertainty is relatively confined. If it was open to a paying party to rely upon the making of settlement offers at the costs assessment stage then parties receiving offers of settlement or offers of compromise would not know whether the offer concealed within it the uncertainty involved in the exercise by the assessing officer of a discretion as broad as the costs discretion exercised by the Court. The interpretation contended for by the defendants would have a tendency to undermine the effectiveness of rules-based and Calderbank offers by making their content less certain. Effect was first given to Calderbank offers in New South Wales in 1987 (Messiter v Hutchinson (1987) 10 NSWLR 525) and in their use was recognised in the Australian Capital Territory in 1988 (Biernacki v Klenka (1988) 80 ACTR 1). In my view the Rules, and the terms of rr 1751 and 1761 in particular, must be read in the context of the acceptance of the consideration of settlement offers at the point when the Court determines what costs order to make. That is part of the accepted background against which the Rules operate and against which their scope must be interpreted. It is a part of the context that I have relied upon in reaching the interpretation outlined earlier.
Notwithstanding this relatively straightforward answer to the underlying issue posed by the defendants’ objection, it is necessary to revisit the decisions below in order to decide how this appeal should be disposed of.
The decision of the Registrar
In relation to the issues to be determined and the submissions of the parties, the Registrar said:
The submissions of the parties raise the threshold issue of whether pursuant to rule 1751 and rule 1761, I have jurisdiction to deal with matters such as mandatory offers and disputes as to the costs incurred in obtaining professional reports.
…
It is obvious that I am bound by both the Rules and relevant precedent in making any decision in my role as a Taxing Officer. I am also restricted in the exercise of my discretion by whether there is any rule or precedent that confers upon me the power to make those decisions. The Defendants in the otherwise very helpful submissions have not provided guidance, whether by rules or precedent as to whether I can exercise any such discretion at all.
[The Registrar then referred to Calderbank offers and the onus on the offeror to establish to the satisfaction of the Court that in all circumstances the failure of the opponent to accept the offer was unreasonable.]
I cannot imagine a procedure I could use as a Taxing Officer to establish whether in all the circumstances the failure of the opponent to accept the offer was unreasonable. To attempt to do this when the matter was purportedly resolved by consent order without having access to the full range of powers of the Court is to my mind not possible.
… I therefore reject the submissions to the extent that I, as a Taxing Officer can resolve these two particular disputes in a fair and just manner.
Orders
In order to move this matter forward I make the following orders:
The general Objections made by the First and Second Defendants are dismissed.
…
Two points should be noted:
(a)the Registrar dismissed objection 5; and
(b)having regard to what I have said above, the order made was the correct one.
The decision of the Registrar on reconsideration
The reasons of the Registrar on reconsideration once again summarised the background and the parties’ submissions. The reasons continued:
In my experience in the Magistrates Court the functions of a registrar are, generally to assist the magistrates in preparing matters for court and in giving effect to any decision. The powers of the registrar are defined in Rule 6251 and the powers of a registrar in assessing costs in Divisions 2.17.4 and 5 of the Rules.
The basis of my reasoning in this matter is that I draw a distinction between the power to award costs and the power to assess an application for costs in a proceeding.
He referred to the decision of the Court of Appeal in Hulanicki v Walton (No 2) [2015] ACTCA 45 and said:
This precedent appears to me to support my contention that the courts themselves see that the awarding of costs in an action lies within the jurisdiction of a court.
As noted above, the powers of a registrar are defined in Division 2 of the Rules. Rule 1800(2) states that the costs must be assessed by the registrar. There appears to me to be an essential difference in an award of costs by a court, and the awarding of any costs that are the subject of an assessment.
Having regard to the distinction it appears to me that the determination of an award of costs emanating from a Calderbank offer or an “economic loss report” clearly fall into a category that is the preserve of the courts. Therefore a registrar does not have the jurisdiction to hear and determine these matters.
The original matter of Justin Dowling Thompson v Mary Desmond (first defendant) and insurance Australia Ltd (second defendant) settled by way of a consent order. The Rules, at rule 1613(2) provide that consent orders may only be set aside in certain circumstances, none of which are relevant to these proceedings. If costs awards are within the jurisdiction of the court, then surely they are resolved when a consent order is made.
In the light of my reasoning above I confirm my decision of 13 March 2015 that I, as a registrar simply do not have the jurisdiction to hear and determine these objections.
Having said that, I would like to make some observations on a view of the issues that were raised in the parties submissions. [He then went on to consider two issues which it is not necessary to set out.]
Decision
Pursuant to rule 1854 for the reasons given above I confirm my decision of 13 March 2015.
…
It should be noted that by confirming his decision of 13 March 2015 the order was that objection 5 was dismissed.
The Registrar was correct in deciding that it was no part of his function to give consequences to the mandatory final offer as part of the costs assessment process. His duty was to determine the fair and reasonable costs, but not by reference to a retrospective comparison between the outcome achieved and the offer made. Given the general nature of the submission put to him he was correct to reject it at the level of abstraction that he did.
The concept of jurisdiction is one which can have a variety of meanings. Jurisdiction is an expression which is used in a variety of senses and takes its colour from its context: Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at [63]. In the present case in my view the Registrar determined that he did not have power to consider the objection that had been made because he took the view that any such consideration was solely within the power of the Court which was responsible for determining what costs order should be made and not within the power of a registrar conducting a costs assessment.
The alternative characterisation of the reasons is that the reference to jurisdiction was to the exercise of powers within jurisdiction to take into account issues arising from the making of Calderbank or equivalent offers. However, the language of his reasons is more consistent with him having decided that it was simply beyond his power to consider the objection.
While the Registrar was correct in concluding that it was not open to him to give consequences to the mandatory final offer he was wrong to characterise this as a question going to his jurisdiction to consider the objection. Instead, it went to what was permissible to take into account in the exercise of the jurisdiction which he undoubtedly had.
While as a matter of substance the defendants might have been seeking to undermine the effect of a costs order to which they had consented, they were formally raising that issue in the context of an objection in the course of a costs assessment in relation to which the Registrar clearly had jurisdiction. The Registrar was bound to consider and determine whether or not the existence of the mandatory final offer when compared to the terms of the consent judgment have the effect that the costs claimed were not “fair and reasonable”. Consistently with what I have said above, in exercising that jurisdiction the Registrar was bound to conclude that the existence of that offer was not a factor which meant that the costs incurred following the mandatory final offer were not fair and reasonable.
The decision of the Magistrate
His Honour identified the issues by reference to the decision of the Registrar. What he described as point 1 was the issue arising from objection 5. That was described by reference to the Registrar’s decision as follows:
The defendants object that the Bill of Costs does not represent fair and reasonable costs having regard to the mandatory offer made five months prior to settlement and accepted only on the week prior to the hearing.
He next referred to and adopted what Refshauge J said in Brennand v Hartung and Best Practice Education Group Ltd [2014] ACTSC 326 at 92-96. He then set out the relevant aspects of the Registrar’s decision and decision on reconsideration. Next he summarised the submissions made by the parties in relation to point 1. His reasons given in relation to point 1 were set out at [17]-[29] as follows:
17The answer to the contest over point 1 is to be found in analysis of the temporal aspect of the assessment required of the deputy registrar under the rules.
18Rule 1751(2) speaks in terms of the registrar allowing “all costs that the registrar considers were fair and reasonable for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed.”
19The approach traditionally taken to the assessment of costs looks to what are “necessary or proper” costs but nothing turns on that for present purposes.
20The temporal aspect of the assessment required is referred to in Law of Costs at paragraph 16.17 in these terms:
What is ‘proper’ (or ‘necessary’) must be judged by reference to the circumstances existing when the work was done, not in relation to the eventual state of the circumstances at the trial. Hindsight is not the proper test.
21The authority quoted for that proposition is Bartlett v Higgins [[1901] 2 KB 230]. The facts bear mention. The plaintiff brought an action claiming relief in certain money lending transactions. He was an officer in the militia who had volunteered for military service in South Africa in the conflict which became known as the Boer War. He was expecting an order to leave for South Africa at any time on 2 days notice. A superior officer had told him that he was certain to go and gave him 3 days leave to settle his private affairs. The plaintiff applied for and obtained an order for examination with the costs of the examination being costs in the cause. Examination of the plaintiff took place over 2 days but as matters transpired the plaintiff had not received orders requiring him to proceed to South Africa by the time the action came on for trial. He attended for the trial but at the outset the defendant submitted to a judgment in effect conceding the whole of the plaintiff’s claim and with the defendant “to pay the plaintiff’s costs of this action.” The taxing master disallowed the costs of the examination on the basis that “(t)he examination of the plaintiff was useless and the costs of its were thrown away. The plaintiff never went to South Africa and he attended the trial.”
22The Rules of the Supreme Court 1883 (UK) dealing with costs are not reproduced in the decision of the Court of Appeal but I infer that they were in unremarkable form. The appeal was allowed. Stirling L.J. dealt with the question before the Court in this way:
In my judgment, it is not correct to say that costs are not to be allowed because in the ultimate event they turn out to have been unnecessary. The taxing master must not consider whether they have been “necessary” having regard to the event, but whether they “... have been necessary or proper for the attainment of justice” – that is I think necessary or proper having regard to the state of things at the time the examination was ordered. That, it seems to me, is the time with reference to which the propriety of incurring the costs should be considered.”
23The principle outlined in Bartlett v Higgins has been applied in Australia – see Grant v Australian Knitting Mills [[1937] SASR 113] at 115 per Murray CJ.
24Despite the difference in nomenclature, there is no basis for concluding that the assessment process required of a deputy registrar under the Court Procedures Rules 2006 (ACT) is relevantly any different to that of a taxing officer under a taxation of costs regime.
25The argument raised by the appellant seeks to have the deputy registrar make his assessment of the work done by the solicitor having regard to the ultimate outcome – that is the ultimate acceptance by the plaintiff of the settlement offer leading to the consent judgment. In doing so the appellant invites the deputy registrar, impermissibly, to look beyond the state of things at the time the disputed work was done.
26During the period when the disputed work was done, an offer had been made by the second defendant and not accepted by the plaintiff. The duty of the solicitor was to get the matter ready for hearing. The assessment under rule 1751(2) is to be made having regard to that state of things and not (in the absence of any special costs order) having regard to the ultimate outcome by way of the settlement reached and the consent judgment entered.
27The broader interests of insurers in the affordability and sustainability of the compulsory third party scheme in the Territory are valid, but they cannot over-ride the fundamental approach required to be taken to the point in time at which a decision is to be made for the purposes of assessing party and party costs in the usual way. Of course a special costs order may be made by a court in many forms including by way of directing that costs in relation to some identified matter or after some identified point in time are not to be recovered. The identified interests of insurers can be met by the way in which the terms of comprise agreements and consent judgments are crafted.
28As I have already found, the decision of the deputy registrar on point 1 was based upon a conclusion that, as a matter of principle, he had no power or jurisdiction to decide the objection because it was not his role to form a view on the reasonableness or otherwise of the plaintiff’s rejection of the original mandatory final offer.
29For the reasons given my conclusion is that his determination is required, as a matter of principle, to be based upon his assessment of what is fair and reasonable (for the stated purposes in rule 1751) having regard to the state of things at the time the costs were incurred. It may be that a determination based upon this principle will produce the same outcome as the deputy registrar’s decision, but the deputy registrar’s decision did not apply the principle so expressed. It follows that his decision was based upon a wrong principle.
[Footnotes omitted]
[Emphasis in original]
It should be noted at this stage that the extent of his Honour’s conclusion was that the Registrar’s decision was based upon a wrong principal: [29].
His Honour then went on to deal with the issue arising from objection 6 which he described as point 2. In relation to that issue his Honour’s reasons were to the effect that it was open to the Registrar to consider whether or not the costs of the Macquarie Reporting Services report were recoverable having regard to the comparison between be assumptions stated in the report and the available medical evidence. His Honour concluded that the Registrar was able to determine whether the cost of obtaining the loss report were fair and reasonable having regard to the state of things of the time when the costs were incurred. As a consequence he concluded that the Registrar’s decision was also based upon a wrong principal.
His Honour then turned to consider what orders should be made. He noted that “the parties did not ask that I exercise the powers of a registrar in relation to the items in the bill of costs under objection.” He therefore considered that it was appropriate that the decision should be set aside and the bill of costs returned to the Registrar for reconsideration in accordance with the reasons. He ordered the plaintiff to pay the defendants costs although permitted the parties to apply for a different costs order.
The Magistrate was correct to explain that the assessment of costs have a temporal element, because it was necessary to take account of the requirement to incur costs having regard to the circumstances that existed at the time rather than by reference to some comparison between what was ultimately achieved and what had been offered earlier. However, as I have pointed out above, there is a more fundamental reason why the contention of the defendants had to be rejected, namely that in the context in which it appears the requirement that it be just and reasonable cannot involve giving consequences to mandatory final offers (or Calderbank offers).
It is significant for the purposes of the present appeal to note that his Honour proceeded on the basis that neither party asked him to exercise the powers of the Registrar in relation to the items in the bill of costs under objection. It is for that reason that he remitted the matter to the Registrar. He had, however, noted in relation to objection 5 that “it may be that a determination based on this principle will produce the same outcome as the deputy registrars decision”. His Honour may have misunderstood the position of the plaintiff in relation to whether or not he was being asked to determine the issue raised by objection 5. That is because it was clear that the matters raised by objection 6 needed to be determined by the Registrar upon a remittal, whereas in relation to objection 5 at least so far as the plaintiff’s submissions were concerned, there could only be one answer to the objection, namely, that it should be dismissed.
Plaintiff’s submissions on grounds of appeal
The plaintiff submitted that his Honour had effectively failed to address the question of general principle raised by the plaintiff in answer to the defendants’ objection 5. That meant that even if the defendants were correct in their contention that the Registrar had wrongly denied himself jurisdiction, the decision actually made in relation to objection 5 was the correct one because if the jurisdiction was exercised the Registrar was obliged to dismiss the objection.
The plaintiff contended that in determining the matter on the basis of the temporal consideration that his Honour did, he determined it on the basis that was not argued and failed to address the more fundamental contention of the plaintiff.
In any event, the plaintiff submitted that the conclusions expressed at [25]-[26] quoted above effectively disposed of the whole of the substance of objection 5. The plaintiff submitted that although his Honour reached the conclusion by a different route from that adopted by the Registrar, the logical outcome of his decision was the dismissal of objection 5 because there was in substance nothing left for the Registrar to determine. As a consequence the plaintiff submitted that there was no point in remitting the matter for further decision and his Honour fell into error in taking that course.
Defendants’ submissions as to grounds of appeal
The defendants submitted that there was no error in the Magistrate’s approach and, in particular, that it was appropriate for his Honour, having found error to remit the matter back to the Registrar for determination on the merits. The defendants submitted that it would be inappropriate to uphold the Registrar’s decision on the basis of a proposition, namely the temporal consideration, that was not part of either party’s case on assessment or appeal and not subject to any submissions before the Magistrate.
The defendants denied that the approach that they were advocating involved the application of Calderbank principles to the costs assessment process. Rather they contended that they were simply giving effect to the general terms of rr 1751 and 1761. That would permit the Registrar to disallow an item if, in the light of the existence of a settlement offer, a knowledge of the final judgment amount and the information available at the time when the costs were incurred, the Registrar reached the decision that the incurring of costs was not fair and reasonable.
Further, counsel for the defendants indicated that upon remittal the defendants would wish to undertake what was quintessentially a factual enquiry in relation to costs incurred during this period as to whether or not the plaintiff was in a position to know that he would be unlikely to do better than the amount which was offered. Counsel for the defendants pointed in particular to the evidentiary position in relation to the plaintiff’s allegations of bilateral carpal tunnel syndrome, pain in his ankles and pain in his back. There was an issue as to whether or not these matters had been raised before the Registrar for the purposes of r 1855(4)(b). That rule prevented a party who had applied for review before a magistrate of a decision on reconsideration from raising any ground of objection not stated in a statement of objection or raised before the registrar. The instructions given to Counsel on either side were in conflict and there was no evidence as to whether or not these factual issues were raised in relation to objection 5 (which said nothing about them) as opposed to in relation to objection 6 (where they were clearly raised).
Determination of the appeal
Having reached the conclusion that the Registrar had erred in concluding that he had no jurisdiction, the Magistrate considered it appropriate to remit the matter to be determined in accordance with his reasons. However, the Magistrate’s reasons were not correct in so far as the basis for addressing the objection was that it should be examined from the point of view of what was necessary and proper at the time at which the expenses were incurred. He appeared to contemplate the possibility that, notwithstanding the general nature of the objection, the existence of the mandatory final offer may be relevant in relation to the incurring of costs. Having regard to the approach that I have articulated above, the existence of the mandatory final offer could not be relevant to the Registrar’s task having regard to the general nature of the objection that had been taken. The objection that had been taken related to the whole of the costs incurred and did not seek to address any particular significance of the existence of the mandatory final offer at any particular time.
In my view having regard to the nature of the objection that had been taken and the fact that it is impermissible upon a costs assessment to give effect to mandatory final offers or Calderbank offers as part of considering what was “fair and reasonable”, there was only one outcome which could be reached in relation to objection 5. As a consequence his Honour was bound to determine the matter himself or, if he considered it appropriate to act consistently with the position he understood to have been adopted by the parties, to have remitted the matter to be determined in accordance with reasons which made it clear that it was not open to give costs consequences to the existence of the mandatory final offer in the circumstances of this case. Under r 1855(5)(c) it was open to his Honour to return the items the subject of the objection to the Registrar with directions to determine the objection in accordance with his reasons or with a direction that, in so far as the items were affected by objection 5, the objection be dismissed.
In summary my conclusions are:
(a)The Registrar did err in denying himself jurisdiction as opposed to determining that he did not have power to engage in the exercise that he was being invited to engage in when determining objection 5.
(b)The Magistrate was correct in determining that the Registrar had erred by denying himself jurisdiction.
(c)The Magistrate erred in failing to determine the point of principle raised by the plaintiff’s submissions and, had he done so, he would have been obliged to determine that objection 5 should be dismissed or return the items the subject of objection 5 to the Registrar with a direction to determine them in a manner consistent with the rejection of objection 5.
In those circumstances, in my view, the appeal must be allowed.
In relation to costs the plaintiff sought an order that the defendants pay 75% of his costs of the review application before the Magistrate. That was on the basis that although he did not succeed in relation to objection 6 he ought to have succeeded on objection 5 and that objection 5 was the more significant issue having regard to both the significance of the question of principle and the magnitude of the costs issue at stake. In my view, the appropriate order is that the plaintiff recover 50% of his costs of the application for review. In my view that gives appropriate effect to the plaintiff’s failure in relation to objection 6, but also recognises that the more significant issue between the parties both as a matter of principle and quantum was the issue relating to objection five. On that issue even though the defendants were correct in asserting that the registrar had wrongly denied himself jurisdiction the exercise before the Registrar and the costs in relation to the application for review were incurred because the defendants took a position in objection 5 which I have found to be wrong.
In relation to the appeal, in my view, costs should follow the event.
Orders
The orders of the Court are:
1.The decision of the Magistrates Court made on 15 December 2015 is set aside and the following orders made:
(i) the decision of the Deputy Registrar made on 23 September 2015 confirming his decision on 13 March 2015 is set aside;
(ii) objection 5 is disallowed;
(iii) the items in the bill of costs the subject of objection 6 are returned to the Registrar for reconsideration in accordance with the following direction: the Registrar is directed to hear and determine objection 6;
(iv) the defendants are to pay 50% of the plaintiff’s costs of the review of the Registrar’s decision.
2.The respondents are to pay the appellants costs of the appeal.
| I certify that the preceding sixty-three [63] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Associate Justice Mossop. Associate: Date: 19 August 2016 |
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