Loading...
Queensland Judgments

beta

Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

GEJ & MA Geldard Pty Ltd v Mobbs (No 3)

 

[2011] QSC 297

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO/S:

Trial Division

PROCEEDING:

Trial

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

1 July 2011

DELIVERED AT:

Brisbane 

HEARING DATE:

Written submissions as to costs and interest provided 25 March 2011

JUDGE:

Ann Lyons J

ORDER:

 

CATCHWORDS:

SETTLEMENT – EFFECT OF SETTLEMENT UPON JUDGMENT SUM – where claims for apportionment under the Civil Liability Act 2003 (Qld) refused – whether at common law the amount received by the plaintiffs from the “settling defendants” should be accounted for by reducing the judgment sum by $100, 000

INTEREST – RECOVERABILITY OF INTEREST – IN GENERAL – where the court found in an earlier proceeding that the sixth and eighth defendants were negligent in spraying herbicides which caused damage to the plaintiff’s crops – where the plaintiffs were awarded $467,187.45 plus interest at a rate of 10 per cent – whether the defendants should pay interest pursuant to s 47 of the Supreme Court Act 1995 (Qld) on the judgment sum up to the date of judgment – at what point interest should accrue

PROCEDURE – COSTS – INDEMNITY COSTS -  where plaintiff made an offer to settle with the sixth and eighth defendants prior to trial – where offer not accepted and trial proceeded – where  the judgment awarded was more than the settlement sum – where significant expert report received by the defendants after the offer to settle was made – whether the Court should depart from r 360 of the Uniform Civil Procedure Rules 1999 (Qld)

Civil Liability Act 2003 (Qld), s 31, s 32B

Supreme Court Act 1995 (Qld), s 47

Uniform Civil Procedure Rules 1999 (Qld), r 360

Boncristiano & anor v Lohmann & ors [1998] 4 VR 82

Castro v Hillery [2002] QCA 359

Commonwealth of Australia v Cornwell (2007) 229 CLR 519

Greig & Anor v Commissioner of Taxation & Ors (No 2) [2010] QSC 265

Gunston v Lawley [2008] VSC 97

Hughes v Grogan [2007] QSC 078

Interchase Corporation Limited v ACN 010 087 573 Pty Ltd & Ors [2001] QCA 191

Ray Teese Pty Ltd v Syntex Australia Limited [1998] 1 Qd R 104

Re Wakim Ex-parte McNally: (1998) 198 CLR 511

Ross v Suncorp Metway Insurance Ltd [2002] QCA 93

Simonovski v Bendigo Bank Ltd (No 2) [2003] VSC 139

Sullavan & Anor v Teare [2010] QCA 70

Ted Brown Quarries Pty Ltd v General Quarries (Gilston) Pty Ltd (1977) 16 ALR 23

Townsend v Stone Toms & Partners (1984) 27 BLR 26

COUNSEL:

K Howe and B Wessling-Smith for the plaintiff

G Newton SC and M Trim for the sixth and eighth defendants

SOLICITORS:

Woods Hatcher for the plaintiff

CLS Lawyers for the sixth and eighth defendants

ANN LYONS J:

Background:

[1] On 23 June 2010 I published reasons in relation to the plaintiff’s claim for negligence against the sixth and eighth defendants (the defendants) in these proceedings. The plaintiff’s claim against the first, second, third, fourth, fifth and seventh defendants had settled prior to trial. I was satisfied that the sixth and eighth defendants had breached the duty of care that they owed to the plaintiff when they carried out extensive aerial spraying of various herbicides in “off label” concentrations to control wattle regrowth on the cattle properties Sherwood and Wallumba on 15 December 2005. I was satisfied that the negligent spraying caused damage to the cotton crops on the plaintiff’s properties, Elgin and Noonameena, which are located some 20 kilometres to the south of the fields sprayed.  I was satisfied that the total quantifiable loss is $467,187.45. however the figure claimed by plaintiff in the amended statement of claim is $461,237.23. The questions as to the apportionment of liability under the Civil Liability Act 2003 and the effect of the pre trial settlement with the other six defendants were adjourned to a further hearing and further written submissions.

[2] On 11 March 2011 I published my reasons dismissing claims for apportionment under the Civil Liability Act 2003 (Qld) (the CLA).

[3] Counsel for the plaintiff and counsel for the sixth and eighth defendants have now provided submissions as to the amount of the judgment sum, the rate of interest on the judgment sum and the date from which it should be assessed and costs.

[4] The plaintiff seeks orders that:

(i) the sixth and eighth defendants pay the plaintiff’s costs on an indemnity basis on the grounds that the plaintiff made an offer to settle dated 28 July 2009.

(ii) interest on the Judgment sum in accordance with s 47 of the Supreme Court Act 1995 (Qld).

[5] The sixth and eighth defendants seek orders that:

(i) the judgment sum be reduced by $100,000 in order to account for the monies already received by the plaintiff from the settling defendants;

(ii) the plaintiff be awarded no interest as they have failed to prove that the loss was suffered on any particular date; or in the alternative that interest be awarded only from 20 March 2007 when these proceedings were commenced and that it be reduced from 11 September 2008 to account for the $100,000 received by the plaintiff from the settling defendants at the time;

(iii) the only costs order be that the sixth and eighth defendants pay the plaintiff’s costs on the standard basis only insofar as those costs exceed $200,000.

The Terms of Settlement

[6] In relation to the settlement between the six settling defendants and the plaintiff, the Terms of Settlement were signed by all eight defendants on 12 August 2008.  Those Terms provided that the first, second, third, fourth, fifth and seventh defendants agreed to pay to the plaintiffs the sum of $300,000. The parties agreed pursuant to paragraph 3 that the sum of $300,000 includes the sum of $200,000 for costs. The third, fourth and fifth defendants agreed to pay $100,000 on or before 11 September 2008, the seventh defendant agreed to pay $100,000 on or before 1 September 2008 and the first and second defendants agreeing to pay $16,666.67 in monthly instalments commencing on 11 September.  Paragraph 5 acknowledged that upon default the plaintiffs were entitled to enter judgment against the default defendant. 

The effect of the settlement between the plaintiff and the other defendants

[7] The sixth and eighth defendants argue that the judgment sum should be reduced by $100,000 and that the sixth and eighth defendants should pay the plaintiff’s costs on the standard basis only insofar as those costs exceed $200,000 in order to take into account for the settlement between the plaintiff and the other six defendants.

[8] The sixth and eight defendants contend that even though in my reasons of 11 March 2011 I found that s 32B of the CLA was not enlivened by the settlement, the settlement remains significant as the common law prohibits the plaintiffs recovering more than the total damage which it sustained.

[9] Section 32B of CLA provides as follows:

32B.Subsequent actions

(1)In relation to an apportionable claim, nothing in this part prevents a plaintiff who has previously recovered judgment against a concurrent wrongdoer for an apportionable part of any loss or damage from bringing another action against any other concurrent wrongdoer for that loss or damage.

(2)However, in any proceeding in relation to the other action, the plaintiff cannot recover an amount of damages that, having regard to any damages previously recovered by the Plaintiff in relation to the loss or damage, would result in the Plaintiff receiving compensation for loss or damage that is greater than the loss or damage actually suffered by the Plaintiff.”

[10] I found that s 32B only relates to a situation where a plaintiff has previously recovered judgment against a concurrent wrongdoer.  I found that as the plaintiff had not actually recovered judgment against a concurrent wrongdoer as the proceedings against the other defendants were settled prior to trial, that s 32B did not apply. 

[11] In relation the question of the apportionment of liability with the other six defendants, the provisions which relate to proportionate liability are set out in part 2 of the CLA and I indicated that the requirement of s 31 needed to be carefully considered.

31 Proportionate liability for apportionable claims

(1)In any proceeding involving an apportionable claim-

(a)the liability of a defendant who is a concurrent wrongdoer in relation to the claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just and equitable having regard to the extent of the defendant’s responsibility for the loss or damage; and

(b)judgment must not be given against the defendant for more than that amount in relation to the claim.

(3)In apportioning responsibility between defendants in a proceeding the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceeding.

(4)This section applies to a proceeding in relation to an apportionable claim whether or not all concurrent wrongdoers are parties to the proceeding.”

[12] Section 31(1)(a) requires therefore that before the amount of any judgment to be given pursuant to s 31(1)(b) the liability of the other defendants who are concurrent wrongdoers needed to be examined. 

[13] There were two qualifications which had to be satisfied before s 31 applied to limit the defendant’s liability for the plaintiff’s loss pursuant to that section:

(i) the proceedings must be for an “apportionable claim” and

(ii) the defendants must be “concurrent wrongdoers”.

[14] An “apportionable claim” is defined in s 28(1)(a) to include “a claim for economic loss or damage to property in an action for damages arising from a breach of duty of care” and I considered that the claim made by the plaintiff against the defendants in negligence is an apportionable claim as defined in s 28 of the CLA because the claim was for economic loss or damage to property in an action for damages arising from a breach of a duty of care. 

[15] Therefore the next question I needed to determine was whether the current action involves concurrent wrongdoers and if so who they are.   

[16] On the evidence before me I was not satisfied that the sixth and eighth defendants had satisfied the onus on them to establish that the first to fifth or the seventh defendants were concurrent wrongdoers. Neither was I satisfied in relation to the liability as between the sixth and eighth defendants that the statutory conditions compelling the court to adopt the proportionate approach had been satisfied and I did not proceed to apportion liability as between the sixth and eighth defendants pursuant to s 31(a) of the CLA.

[17] With respect to the liability as between the eight defendants and Michael Baker the second pilot who was not a party to the proceedings, I was not satisfied that the statutory conditions compelling the court to adopt the proportionate approach had been satisfied and I did not apportion liability as between Michael Baker and the eighth defendants.

[18] I held therefore that the sixth and eighth defendants had not shown that the first to fifth defendants, the seventh defendant or Michael Baker were concurrent wrongdoers for the purposes of s 30 of the CLA and therefore the claim for apportionment under the CLA failed and that each of the sixth and eighth defendants is liable for the damage unaffected by the CLA.

[19] The fact remains however that this is an apportionable claim as defined by the CLA even though the defendants were not successful in satisfying the onus on them to establish the other defendants were concurrent wrongdoers for the purposes of s 31.  The defendants rely on a series of cases involving claims against concurrent wrongdoers to argue that the judgment sum should be reduced.  In Townsend v Stone Toms & Partners[1] Oliver LJ stated:

The starting point, and one on which there is a good deal of clear authority, is that where a plaintiff with concurrent claims against two persons has actually recovered part or all of his loss from another, that recovery goes in diminution of the damages which will be awarded against the defendant. A plaintiff can never, as I understand the law, merely because his claim may lie against more than one person, recover more than the total sum due.”

[20] The defendants also rely on the Victorian case of Boncristiano & anor v Lohmann & ors[2] where it was held:

“Where the claims for damages are concurrent, in the sense that the claims “overlap”, recovery by the plaintiff of the whole or part of the loss claimed from one defendant will necessarily be taken into account in assessing the damages to be recovered from the other.”

[21] Reliance is also placed on the High Court decision of Re Wakim; Ex-parte McNally:[3]

“There is, then, but a single claim for damages that [the Plaintiff] seeks to pursue against each of the parties he has sued. And judgment and recovery against one will diminish the amount that may be recovered from the others.”

[22] The plaintiff however relies on the Victorian case of Gunston v Lawley[4] where in respect of the Victorian proportionate liability scheme Byrne J held:

“[59]The scheme of s 24AI is that any given defendant is at risk of liability and judgment for an amount limited to its proper share of the loss or damage the subject of the claim. This risk is not increased by dealings between the plaintiff and another concurrent wrongdoer. For example, a failure by that wrongdoer to pay its share does not increase the liability of any other defendant. Nor is it diminished by dealings between the plaintiff and another wrongdoer as, for example, the successful outcome of a subsequent proceeding under s 24AK. I speak here of the risk represented by the liability which has been determined in the first proceeding and the judgment given in that proceeding. Where, however, the plaintiff recovers money in the subsequent proceeding, the rule against double recovery may come into play to bring about some adjustment as between the wrongdoers.

[60]The effect of the proportionate liability regime, therefore, is to transform fundamentally the relationship which exists between a plaintiff and a concurrent wrongdoer defendant. Where under a solidary liability regime each defendant is liable for the whole of the plaintiff’s loss, a payment by one must affect the liability of the other. It is for this reason that the plaintiff, after settlement with one wrongdoer which involves payment by that wrongdoer in diminution of the plaintiff’s loss, cannot obtain judgment for the total loss. In the proportionate liability regime, however, a payment by one concurrent wrongdoer is a benefit conferred on the plaintiff independently of its right of redress against each other wrongdoer. To adapt the dictum of Dixon CJ in National Insurance Co v Espagne, the benefit of the payment made by the concurrent wrongdoer is intended for the plaintiff; it is not intended in relief of the liability of the others each to compensate the plaintiff to the limit of its proportionate liability.

[61]This is, of course, not to say that the plaintiff has recovered from all of the concurrent wrongdoers payment which in total exceeds its loss or damage. Ms Lawley has received from the building surveyor some $49,000 more than was later found to be his proper share of her loss or damage. When the other concurrent wrongdoers make the payments which have been found to reflect their responsibility so that these, together with her $49,000 surplus, overtop the amount of her loss or damage, then the question will arise as to the fate of this surplus. In the meantime, there is no double recovery.

......

[65]A further consideration is this. Under the proportional liability scheme a plaintiff is, in effect, suing each concurrent wrongdoer separately and recovers a separate judgment against it. This is such a fundamental change from the position which previously existed that courts must struggle to rid themselves of concepts which depend upon the outmoded joint and several solidary liability. The plaintiff under the new regime takes, in each case, the risk that any of the judgments will not be satisfied. Where a defendant offers a sum in settlement of the plaintiff’s claim, the plaintiff’s risk immediately changes. It is faced with an offer of payment which, if accepted and the payment made, fixes the risk of the litigation and the risk of recovery. Uncertainty is replaced by certainty. Before the payment is made the settlement fixes the risk of litigation and substitutes for the risk of recovery a new risk or benefit which will depend upon the terms of settlement. This risk may be a small one, as, for example, where the terms of settlement include some guarantee of payment or other security for payment. It may be a different one as, for example, where the terms of settlement are for payment by instalments. What is important is that it does not affect the risks of the other concurrent wrongdoers. They may still contend at the trial, as in this case, that the proportionate share of the settling wrongdoer was greater than that represented by the settlement. Indeed, their ability to do so may be increased as a consequence of the settlement where the settling defendant takes no further part in the proceeding and is therefore not concerned to minimise its responsibility for the plaintiff’s loss or damage. If, as a consequence, the settling defendant is fixed with a greater responsibility than would otherwise have been the case, the effect of the settlement would be to reduce the judgments which are recovered against these other wrongdoers. This is an added risk which the plaintiff assumes by settling with a defendant. In these circumstances, the value of the settlement to the plaintiff cannot be assessed by having regard only to the amount agreed to be paid under its terms. What must be valued is the benefit and the risk – the benefit which the settlement has brought to the plaintiff and the further risk which it has created for the plaintiff. These will be matters which the plaintiff will have assessed in negotiating the settlement.

[66]These are considerations which might lead to the conclusion that settlement, and even recovery, by a plaintiff in a proportional liability claim ought not to be brought to account in giving judgment against the other concurrent wrongdoers. But I need say nothing further about this for, in the present case, the plaintiff, Ms Lawley, is not shown to have recovered in the aggregate a sum greater than the amount of her loss or damage.”

[23] Although Byrne J states that “a payment by one concurrent wrongdoer is a benefit conferred on the plaintiff independently of its right of redress against each other wrongdoer” the question as to the fate of a plaintiff’s “surplus” in recovery is left open.  It is clear that Byrne J indicates a leaning toward the plaintiff’s argument against accounting for the settlement and states that settlement by a plaintiff in a proportional liability claim ought not to be brought to account in giving judgment against the other concurrent wrongdoers.

[24] However in the current case it would appear that a total of $300,000 has in fact already been paid with $200,000 specifically allocated to costs.  In my view the amounts paid have to be taken into account otherwise there would be a surplus.  The plaintiff cannot recover more than their loss and the Terms of Settlement, which are now in evidence, indicate that the plaintiff’s current loss has been reduced by $100,000 because of the Terms of the Settlement. Whilst there is no evidence before me that the Terms of Settlement have been satisfied the plaintiffs have not argued that they have not been paid in accordance with that agreement. It is clear however that as the NSW Court of Appeal held in CSR Limited & Anor v Maree Anne D’Arcy[5] “the rule against double compensation prevents receipt of payment which, in aggregate, exceeds the amount owed by several defendants”. I would therefore only award the total judgment amount of $461,237.23 if the plaintiff satisfies the court that the amount of $100,000 payable pursuant to the Terms of Settlement has not in fact been received.

[25] In this case the Court’s jurisdiction has been invoked and the matter has proceeded to trial and now to judgment. I consider that an award of compensation to a plaintiff in excess of their actual loss or damage by way of judgment clearly goes against the common law and the philosophy behind the CLA and s 31(1)(b) and s 32B of the CLA in particular which clearly indicate that a plaintiff should not receive compensation for loss or damage that is greater than the loss or damage actually suffered by the plaintiff.

[26] I consider that the amounts paid pursuant to the Terms of Settlement must be taken into account to avoid the sixth and eight defendants compensating for a loss for which the plaintiff has already been partly compensated.

[27] Accordingly the judgment sum is $361,237.23 unless the plaintiff satisfies the Court the amounts payable pursuant to the Terms of Settlement have not in fact been received.

Interest

[28] In my reasons delivered 23 June 2010 I determined that the plaintiff was entitled to interest to the date of judgment. Whilst the current rate is 10% it is clear that until 1 July 2007 the rate was 9%.

[29] The plaintiffs seek interest to be paid on the judgment sum from the date of spraying, 15 December 2005 or alternatively from 1 July 2006. The sixth and eighth defendants argue that the plaintiff has not established its entitlement to interest at all.

[30] The defendants contend that the date at which the loss was sustained was the date when the money for the cotton in question was received, if at all.  The defendants argue that the failure to lead any evidence on this point is fatal to the plaintiff’s claim for interest on the judgment sum. In support of this argument they cite Ted Brown Quarries Pty Ltd v General Quarries (Gilston) Pty Ltd[6] and Ray Teese Pty Ltd v Syntex Australia Limited.[7] However those cases do not specifically address the question of interest, they go to issues of uncertainty regarding the quantum of loss.

[31] The plaintiff has been successful in its cause of action for negligence and a judgment sum has been awarded. Section 47 of the Supreme Court Act provides that “the court may order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit on the whole or any part of that sum for the whole or any part of the period between the date when the cause of action arose and the date of the judgment.”

[32] The award of interest pursuant to s 47 is compensatory in character as articulated by Margaret Wilson J in Greig & Anor v Commissioner of Taxation & Ors (No 2). [8] The section was also discussed by McPherson JA in Interchase Corporation Limited v ACN 010 087 573 Pty Ltd & Ors[9] where his Honour noted:

“The section confers a discretion which, it is settled, is to be exercised judicially with a view to compensating the successful plaintiff for the injury or loss sustained: see Haines v Bendall. The purpose or function of an award of interest under the section is restitutionary. It is not to punish the defendant but to compensate the plaintiff for being kept out of the money represented by the judgment sum in the period between accrual of the cause of action and judgment: Batchelor v Burke; Grincelis v House. In a perfect world, a defendant who injured a plaintiff would immediately recognise the wrong done and pay the amount of compensation required to make good the loss. For reasons that are self-evident, that never happens in practice, and the justification for awarding interest is, as s 47 recognises, to compensate for the delay in payment between the time when the cause of action arises and the date of judgment: Thompson v Faraonio.” (footnotes omitted)

[33] Therefore as I indicated in the reasons of 23 June 2010 the plaintiff is entitled to interest pursuant to s 47 and accordingly to be compensated for the loss which they suffered in the period before the matter was ultimately determined by the Court. I do not consider that the defendants’ argument can stand.

[34] Turning to the date from which interest should be paid, the plaintiff argues that the cause of action was complete and arose when the damage to their crops occurred on the day (or shortly after) the aerial spraying took place.

[35] The defendants argue that if interest is to be awarded it should start from 20 March 2007, the date these proceedings were commenced and must take into account the fact that the plaintiff was due to receive $100, 000 by 11 September 2008.

[36] To argue for interest from the date the cause of action accrued the plaintiff relies on Sullavan & Anor v Teare[10] where the Court of Appeal applied the High Court case of Commonwealth of Australia v Cornwell.[11]In that case it was held:

“However, to show the existence of a completely constituted cause of action in negligence, a plaintiff must be able to show duty, breach, and damage caused by the breach; accordingly, in the ordinary case, it is at the time when that damage is sustained that the cause of action ‘first accrues’ for the purposes of a provision such as s 11 of the Limitation Act [1985 (ACT)].

In Hawkins v Clayton … this Court … rejected the proposition that, at least in the case of claims in negligence for economic loss, time does not run until the plaintiff discovers, or could on reasonable inquiry have discovered, that damage has been sustained”.

[37] It seems uncontroversial that a cause of action in negligence accrues not at the time the damage is first observed but at the time the damage was sustained.  In my view it is difficult to ascertain the precise point in time that damage to the plaintiff’s crops occurred. I have determined that a duty existed and a breach occurred on 15 December 2005 but the damage may have occurred at a point after 15 December 2005. The evidence also indicates that due to the damage, the picking of cotton affected by the spraying was delayed. 

[38] Given the wide discretion conferred by s 47 of the Supreme Court Act I consider that it is reasonable that interest accrue from the date from which the Geldards suffered as a result of lost payments from the season of damaged crops.  This is in accordance with the principles underlying the award of interest as espoused by McPherson JA in Interchase.

[39] Accordingly in my view interest should accrue from 1 July 2006 which is a date when it is reasonable to assume the plaintiffs would have been paid for the 2005/2006 season’s crops. The accrual of the loss at that point in time is evident in the Quantum and Liability Reports of Mr Ken Bullen.[12] Those reports indicate the plant dates and pick dates for the various properties. Pick dates range from 22 March 2006 to 5 July 2006 with only two picks occurring after 1 July 2006. I accept the plaintiff’s submission that two months between pick date and payment is reasonable.

[40] Accordingly the plaintiff is entitled to interest on $461,237.23 at the rate of 9% from 1 July 2006 to 30 June 2007 and 10% from that date until 11 September 2008 when the amount of $100,000 was paid.  From 12 September 2008 until the date of judgment the plaintiff is entitled to interest at the rate of 10% on $361,237.23.

Indemnity Costs

[41] These proceedings were commenced on 29 March 2007 and were extensively managed in the Supervised Case List throughout 2008 and 2009.  A request for trial date was filed on 22 May 2009 and the matter was ultimately set down for a five day trial which commenced on 3 August 2009.  Five further hearing days were required and the oral evidence finally concluded on 12 February 2010.  Written submissions were provided on 19 March 2010. 

[42] In their current written submissions as to costs and interest both parties have annexed the plaintiff’s offer to settle with the sixth and eighth defendants dated 28 July 2009. The terms of settlement as between the plaintiff and the first, second, third, fourth, fifth and seventh defendants (the settling defendants) are also annexed.

[43] The plaintiff’s 28 July 2009 settlement offer was that the plaintiff would accept payment in the amount of $200,000 plus payment of their costs on the standard basis in full and final resolution of the proceedings.  The offer remained open for 14 days from the date of service.  The offer complies in all respects with r 360 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR).

[44] The offer is less than half the amount awarded to the plaintiff in my decision of 23 June 2010. By my reasons dated 11 March 2011 the sixth and eighth defendants are each liable unaffected by the proportionate liability sections of the CLA.

[45] Rule 360 of the UCPR provides:

“360 Costs if offer to settle by plaintiff

(1)If--

(a)the plaintiff makes an offer to settle that is not accepted by the defendant and the plaintiff obtains a judgment no less favourable than the offer to settle; and

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

the court must order the defendant to pay the plaintiff's costs calculated on the indemnity basis unless the defendant shows another order for costs is appropriate in the circumstances.

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

[46] The plaintiff argues that unlike r 361, which relates to offers by defendants, r 360 provides that the indemnity costs order is not limited to a period after the offer to settle is made but is an order for indemnity costs of the entirety of the proceedings. They contend that the terms of r 360 make it clear that the indemnity costs order is mandatory unless an onus is shifted by the defendants showing another costs order is appropriate in the circumstances.

[47] Whilst the defendants argue that in circumstances where an offer is made, the burden of proving that indemnity costs should be awarded lies with the plaintiff, I consider that r 360 clearly states that indemnity costs must be ordered “unless the defendant shows another order for costs is appropriate in the circumstances”. I accept the argument that “… the purpose of r 360 is to ensure that litigants consider their position carefully; to be reasonable and not to gamble and unnecessarily waste court time and other litigants’ money” [13]. The onus is clearly on the defendants to establish that in the circumstances of this case another order is appropriate.

[48] The defendants argue that the present case is one where r 360 should be departed from.  In particular the defendants argue that to succeed the plaintiff had to demonstrate that spray from the defendants’ activities travelled to their properties some 20 kms away but that at the time the 28 July 2009 offer was made (3 clear days before trial) the defendants’ experts view was that it was very unlikely that the spray had travelled that far and the plaintiff’s expert’s report in this regard was not received until 6pm on Friday 31 July 2009.

[49] It is clear that report was not only delivered late but that it contained an important error.  It was not until day three of the trial that the amended report dated 3 August 2009 was tendered (Exhibit 7). That report contained numerous corrections and additions to the initial report, including a correction to the active ingredient used in the spray mix, which had significantly distorted the analysis in the original report. That also necessitated a correction of the results of the computer model, AgDisp. That report also contained the addition of three new pages of tables and charts. Section 4.3 in the amended report is quite different. Appendix 2 is also significantly different in the 3 August 2009 report, with numerous changes to the figures and 5 graphs were excluded. Importantly, a number of factors used to calculate the alleged drift were changed including the wind speed, the spray settings and the release height of the spray. Those changes had the effect of markedly increasing the amount of material allegedly drifting down wind where the correction of the initial error identified would have markedly decreased the amount of material the model suggests could have drifted.

[50] The defendants contend that the case of Ross v Suncorp Metway Insurance Ltd[14] is analogous to the present case. In Ross an order for costs on the standard basis was upheld by the Court of Appeal. The primary Judge was found to have correctly departed from r 360 on the basis that, inter alia, the nature of the case was not clearly made out until all the medical reports had been obtained after the time for accepting the offer expired.  Douglas J discussed the relevant principles as follows:

[27] As to the third ground argued, the material reveals that the plaintiff served an offer to settle under Uniform Civil Procedure Rules (‘UCPR’) Chapter 9 Part V at the same time as the claim and statement of claim were served. The offer made was for $86,450 just short of the final judgment.

[28]Pursuant to r 360 of the UCPR when considering an application to make  an order for costs on an indemnity basis, a trial judge is entitled not to do so if a defendant shows that ‘another order for costs is appropriate in the circumstances’.

[29]The factors taken into account by his Honour, the trial judge, in refusing an order for indemnity costs in this case were:

(a)the fact that the offer had been served contemporaneously with the claim and statement of claim;

(b) the fact that numerous of the medical reports upon which his Honour placed reliance were not generated until after the offer had been made (in particular those of Jackson and Hoey), and therefore would not have been available for consideration by the defendant at the time of the offer; and

(c) the fact that the amount eventually awarded was so close to the amount offered.

[30] In fact at the time the offer was made, the only basis upon which the defendant could assess the claim was upon the allegations made in the plaint. The nature of the case was not clearly made out until all the medical reports had been obtained after the time for accepting the offer expired. To succeed on this ground the appellant must point to a fundamental error of principle made by his Honour in not awarding a grant of indemnity costs. In my view it cannot be said that the exercise of his Honour’s discretion was so manifestly wrong as to justify intervention by this court.”

[51] The defendants’ essential argument is that the crucial expert report, namely Mr Gordon’s amended report, “upon which liability ultimately rested” was not tendered until the third day of trial and therefore their rejection of the plaintiff’s offer was not unreasonable in the circumstances.

[52] Ultimately I accept the defendants’ arguments in this regard. I consider that Gordon’s Report was a report of great significance. This was a long and complex trial involving almost 10 days of evidence.  This expert report was delivered late, essentially on the morning of trial. It was a complex report involving computer modelling.  It was incorrect in its calculations, and in fact patently so, by an error of ten. The final report was delivered on day three of the trial. That report was significantly different to the original report.  In the end a great deal of reliance was placed on that report in relation to whether the chemicals could have travelled the required distance.

[53] I consider therefore that at the time the offer to settle was delivered the sixth and eighth defendants did not have the benefit of this significant document and could not therefore appropriately assess the offer to settle in light of the contents of that Report.  As Ashley J held in Simonovski v Bendigo Bank Ltd (No 2):[15]

“In my opinion it is important that, when an offer is made, and during the period when it remains open for consideration, the offeree then has in its possession all the material from the opposing party to which it is entitled, whether by operation of the Rules or by order of the Court. An offeree should not be obliged to consider an offer whilst ignorant of required detail of the offeror’s case.”

[54] Significantly, in Castro v Hillery[16] Williams JA held:

[72]The basic principle in my view is that the recipient of the Offer to Settle must have an informed opportunity to assess the chances of either side doing better than the offer. Further that issue must be decided on material disclosed in the proceedings; it is the claim as made in the proceedings which is under consideration.

[73] A similar issue was considered by the New South Wales Court of Appeal in Rolls Royce Industrial Power (Pacific) Ltd v James Hardie & COI Pty Ltd (2001) 53 NSWLR 626. Stein JA (with whom Davies A-JA agreed) observed at 642 that the learned judge at first instance did not err in concluding that the offeree did not have an informed opportunity to assess its chances because, in that case, the cross-claim was brought at a later point of time. He said: “Surely what must be relevant is the circumstances which exist at the time the offer is made?” Stein JA then quoted with approval a passage from a judgment of Mahoney A-P in an unreported case Fowdh v Fowdh (4 November 1993); there it was said: ‘It is one thing for a plaintiff to present her evidence, make an offer of compromise, and to succeed at trial on that evidence. In such a case, indemnity costs may be warranted. It is another thing for the plaintiff to present a case and make an offer of settlement, and then to succeed at the trial upon a relevantly different case. A plaintiff who has done that may not readily receive indemnity costs. I do not mean by this that minor differences between the case at offer and the case at trial will be of significance or that, if the difference be significant, a discretionary judgment for indemnity costs may not be given. But where the difference between the position at offer and the position at trial be as the Master assessed it to be, a decision to refuse indemnity costs may readily be understood”.

[75]Those English cases to my mind reinforce the proposition that a procedure such as an Offer to Settle must be evaluated in the light of circumstances as they exist at the time the offer is made. If a plaintiff enlarges his case after an Offer to Settle is made and rejected then there will be good reason for refusing the plaintiff indemnity costs notwithstanding that the judgment is better than the offer. As Mahoney A-P pointed out a minor difference in the claim will not ordinarily have that consequence. But where the difference is significant, where the risk to the defendant is significantly altered, there would have to be careful analysis before a proper exercise of discretion could result in indemnity costs being ordered. Cases such as Hiscox v Woods & GIO General Limited [2002] QSC 64 (Moynihan SJA) demonstrate that in particular circumstances an award of indemnity costs can be justified even though further particulars of the claim have emerged after the offer was made.

[76] In Campbell v Jones & Anor [2002] QCA 332 (judgment therein was delivered after argument was heard in this case) Fryberg and Mullins JJ ordered that costs be recovered on the standard basis though the plaintiff did better than her offer to settle. Again that was a case where the statement of loss and damage at the time the offer to settle was made did not disclose significant material which affected the ultimate assessment of damages. The reasoning of their Honours is in accord with the reasoning herein.”

[55] I consider that the defendants have satisfied the onus on them to satisfy the Court that another order is appropriate.

[56] I consider that costs should be assessed on the standard basis. Whilst the settling defendants have paid the amount of $200,000 in relation to costs that relates to the costs of pursuing an action against those defendants and the current costs order relates to the costs of the action against the remaining defendants.

[57] I will hear from Counsel as to the form of the final orders which I consider should generally be in the following terms:

Proposed Orders

1. The judgment sum should be reduced from $461,237.23 to $361,237.23 in order to account for the monies that the plaintiff has already received from the settling defendants.

2. Interest on $461,237.23 at the rate of 9% from 1 July 2006 to 30 June 2007 and 10% thereafter until 11 September 2008 when interest is to be charged on $361,237.23.

3. The sixth and eighth defendants are to pay the plaintiff’s costs of and incidental to the proceedings on the standard basis as assessed or agreed.

Footnotes

[1] (1984) 27 BLR 26.

[2] [1998] 4 VR 82.

[3] (1998) 198 CLR 511 at [147] per Gummow and Hayne JJ (with whom Gaudron J agreed).

[4] [2008] VSC 97.

[5] [1999] NSWCA 216 at [42].

[6] (1977) 16 ALR 23.

[7] [1998] 1 Qd R 104.

[8] [2010] QSC 265.

[9] [2001] QCA 191 at [59].

[10] [2010] QCA 70.

[11] (2007) 229 CLR 519.

[12] Appendix C to Exhibits 2 and 3 tendered at the Trial Hearing.

[13] Hughes v Grogan [2007] QSC 078.

[14] [2002] QCA 93.

[15] [2003] VSC 139 at [18].

[16] [2002] QCA 359 at [79].

Close

Editorial Notes

  • Published Case Name:

    GEJ & MA Geldard Pty Ltd v Mobbs & Ors (No 3)

  • Shortened Case Name:

    GEJ & MA Geldard Pty Ltd v Mobbs (No 3)

  • MNC:

    [2011] QSC 297

  • Court:

    QSC

  • Judge(s):

    A Lyons J

  • Date:

    01 Jul 2011

Litigation History

No Litigation History

Appeal Status

No Status