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  • Unreported Judgment

Habig v McCrae

 

[2014] QSC 69

 

SUPREME COURT OF QUEENSLAND

  

PARTIES:

JOHANNES BAPTIST HABIG

(plaintiff)

FILE NO/S:

Trial

PROCEEDING:

Costs Hearing

ORIGINATING COURT:

DELIVERED ON:

7 April 2014

DELIVERED AT:

Cairns 

HEARING DATE:

18 December 2013

JUDGE:

Henry J

ORDERS:

1.The third defendant pay the plaintiff’s costs on the standard Supreme Court scale up to and including 31 December 2010.

2.The plaintiff pay the third defendant’s costs of and incidental to the action on the standard Supreme Court scale as and from 1 January 2011 including all costs in respect of applications including the orders made on 28 October 2011, 7 June 2013, 2 August 2013, 9 October 2013 and the costs reserved on the first day of trial.

3.The assessed costs ordered to be paid by the plaintiff be set off against the judgment sum and any assessed costs order to be paid by the third defendant prior to any payment by the third defendant to the plaintiff of, or execution on, the balance after such set off.

4.Liberty to apply in connection with the third defendant’s undertaking of expedition on the giving of three days notice in writing.

CATCHWORDS:

PROCEDURE – COSTS – RECOVERY OF COSTS – where the plaintiff claims it was unreasonable to accept the third defendant’s Calderbank offer – whether it was unreasonable for the plaintiff not to accept the third defendant’s Calderbank offer after the expiration of a reasonable period within which it could have made enquiries to assess its prospects of success – whether indemnity costs ought be awarded – whether costs ought be awarded on the District or Supreme Court scale – whether costs ought be set off against the judgment sum

Motor Accident Insurance Act 1994 (Qld) s 51C(10)

Uniform Civil Procedure Rules 1999 (Qld) s 361(1), s 681(1)

Calderbank v Calderbank [1975] 3 WLR 586, applied

Chen v Chan (no 2) [2009] VSCA 233, cited

Elite Protective Personnel v Salmon [2007] NSWCA 322, applied

Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (no 2) (2005) 13 VR 435, applied

Leichhardt Municipal Council v Green [2004] NSWCA 341, applied

Mansi v O’Connor and Ors [2012] QSC 374, considered

COUNSEL:

M Glen for the plaintiff
G Crow for the third defendant

SOLICITORS:

Murray & Lyons Solicitors for the plaintiff

Jensen McConaghy for the third defendant

  1. Judgment was given in this matter on 6 December 2013 at which time it was foreshadowed the parties would be heard as to interest and costs.
  1. Judgment favoured the plaintiff. Quantum was agreed at $800,000 however the judgment made an apportionment of 50 per cent for contributory negligence. Judgment was therefore awarded to the plaintiff in the sum of $400,000. It is common ground the quantum settled was inclusive of interest. No order additional to that already awarding a judgment sum of $400,000 is required in respect of interest.
  1. It remains to determine the proper order as to costs. The outcome of that determination hinges in part upon what is to be made of the exchanges of offers between the parties.

Chronological Order of Offers

  1. In a letter dated 29 April 2010 the third defendant wrote to the plaintiff’s solicitors offering as follows:

“[W]e offer your client a global sum of $200,000.00 inclusive of costs.  This offer takes into consideration 50% contribution from your client for

  1. failing to move the van off the road
  1. failing to keep a proper lookout and/or stay off the road.”[1]
  1. The plaintiff replied under cover of “without prejudice save as to costs” letter dated 25 May 2010 advising “we hold instructions to offer to accept the sum of $1,259,636.70...”[2]  This amount was calculated rejecting any reduction for contributory negligence.  A response to this offer was requested within 14 days.
  1. The third defendant rejected the plaintiff’s offer and made a further open offer by letter on 1 June 2010 saying, “We are prepared to settle your client’s claim for $348,780.75.”[3]  This offer was based on a total amount of $536,585.78[4] discounted by 35 per cent for contributory negligence.[5]
  1. The plaintiff’s solicitors wrote to the third defendant on 12 July 2010 making a further without prejudice save as to costs offer in the following terms:

“We...advise that we hold instructions to reject your offer of settlement.  However, we have received instructions to offer to accept the sum of $1,000,000 plus costs in full and final satisfaction of this claim.”[6]

This offer did not allow for any contributory negligence by the plaintiff.  A response to the offer was requested within 14 days. 

  1. The third defendant wrote to the plaintiff’s solicitors on 22 July 2010 saying:

“We advise that we are unable to accept your client offer dated 12 July 2010.  We are prepared to settle your client’s claim for $400,000 plus costs and outlays.”[7]  

No contribution from the plaintiff was specified but it was implicit in the letter’s reference to the plaintiff failing to stay off the road and keep a proper lookout that the offer assumed some contributory negligence occurred.

  1. On 15 February 2012 at compulsory conference a mandatory final offer pursuant to s 51C of the Motor Accident Insurance Act 1994 (Qld) and ss 27A and 29 of the Motor Accident Insurance Regulations 2004 (Qld) was made by the third defendant as follows:

“TAKE NOTICE that Suncorp Metway Insurance Limited OFFERS to settle the claim in the sum of $400,000.00 (“the offer”). 

If the offer is accepted and:

  • the amount of the offer is equal to or less than the lower offer limit, then Suncorp Metway Insurance Limited will not pay any costs and outlays (including disbursements).
  • the amount of the offer exceeds the lower offer limit but is not more than the upper offer limit, then Suncorp Metway Insurance Limited will pay costs and outlays (including disbursements) in accordance with s.51C of the Motor Accident Insurance Act 1994 (“the Act”) and Regulations.
  • the amount of the offer exceeds the upper offer limit, then Suncorp Metway Insurance Limited will pay standard basis costs (including disbursements) as agreed upon or, failing agreement, as assessed pursuant to the Uniform Civil Procedure Rules.

The offer is inclusive of all heads of damages and statutory refunds and is subject to the attached Release Discharge and Indemnity being signed by the Claimant. 

The offer to settle is open for acceptance for the period of fourteen (14) days...

If the Claimant’s offer is less than the offer above, this document serves as written notice of Suncorp Metway Insurance Limited’s acceptance of the Claimant’s offer.”[8]

  1. The plaintiff’s mandatory final offer was also made at compulsory conference:

“The claimant offers to accept the sum of seven hundred thousand dollars ($700,000) plus standard basis costs and outlays in full and final satisfaction of the claimant’s claim.  This offer is made by way of mandatory final offer pursuant to the Motor Accident Insurance Act 1994.  This offer is open for a period of 14 days and will then lapse.”[9]

  1. Having participated at the compulsory conference of 15 February 2012, the parties then agreed that at the trial of the plaintiff’s action against the defendants the quantum of damages sustained by the plaintiff was agreed in the sum of $800,000.00 (Australian).[10]
  1. On 12 August 2013 the plaintiff made an offer to settle pursuant to Chapter 9, Part 5 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) in the sum of $528,000 plus standard basis costs and outlays up to the date of acceptance of offer.[11]  The plaintiff submits this offer represented a reduction of about 33 per cent of the plaintiff’s damages for contributory negligence/contingencies.[12]
  1. The plaintiff made a “without prejudice save as to costs” offer on 3 October 2013 pursuant to the principles established in Calderbank v Calderbank[13] in the sum of $460,000 plus standard basis costs and outlays up to the date of acceptance of offer.  This offer was “open for acceptance for seven days after service”.[14]  This offer involved a discount of approximately 42.5 per cent on the overall agreed quantum of damages.[15]
  1. The plaintiff asserts that the defendant made no response or counter offer to either of the plaintiff’s offers made on 12 August 2013 and 3 October 2013 and that the defendant could not be engaged to respond with a further offer.[16] 
  1. The plaintiff alleges the third defendant made an offer to the plaintiff to settle the plaintiff’s claim for $150,000, inclusive of costs, on or about 4 October 2013 (the trial commenced on 14 October 2013).[17]  The defendant’s material makes no mention of such an offer.

Discussion

  1. Rule 681 of UCPR preserves the general principle that costs should ordinarily follow the event:

681 General rule about costs

(1)Costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court orders otherwise.

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

  1. One of the well known exceptions to the general rule is that costs may be awarded to an unsuccessful party who makes an offer to settle which is not bettered at trial. That exception is reflected in s 361 of the UCPR, which relevantly provides:

361 Costs if offer to settle by defendant

(1)This rule applies if—

(a) the defendant makes an offer to settle that is not accepted by the plaintiff and the plaintiff obtains a judgment that is not more favourable to the plaintiff than the offer to settle; and

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

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

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

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

  1. Rule 361 only has application to an offer to settle which is made under chapter 9 part 5 of the UCPR pursuant to rule 353. Such an offer must be in writing and contain a statement that it is made under part 5. None of the third defendant’s offers were so endorsed.
  1. The plaintiff focussed at some length on the third defendant’s mandatory final offer, of 15 February 2012.
  1. That offer was for $400,000 plus costs. It was purportedly made pursuant to s 51C of the Motor Accident Insurance Act 1994.  The plaintiff submits it was no offer at all because the “attached release discharge and indemnity” to which it referred was not attached.  The evidentiary uncertainty surrounding that point may have been easily resolved had a copy of the insurer’s mandatory final offer been filed at court in a sealed envelope, as s 51C(8) requires, but there is no indication in the court file that such a document was filed.  The significance of that fact upon the requirement of s 51C(10), that the court must where relevant have regard to the mandatory final offers in making a decision about costs, was not argued.  However it is unnecessary to consider that aspect and the argument that the absence of the release discharge and indemnity disqualifies consideration of the offer as an offer.  That is because of the overriding relevance of the earlier offer of 22 July 2010, an offer which was also for the same judgment sum as ultimately ordered by me.
  1. That offer was not an offer under the rules but it is well established that offers to settle which are not made under the rules, so called Calderbank offers,[18] which are not bettered by judgment may warrant a departure from the general principle that costs should follow the event.  Whether such a departure is warranted depends upon the individual circumstances of the case, including whether the offer made was a genuine attempt to reach a negotiated settlement,[19] whether the offer affords an appropriate opportunity to consider and deal with it[20] and whether the failure to accept the offer was unreasonable in the circumstances of the case.[21]
  1. Read in context the third defendant’s offer of 22 July 2010, that “we are prepared to settle your client’s claim for $400,000 plus costs and outlays”, represented a genuine attempt to reach a negotiated settlement. It was not written without prejudice. It did not impose a specific deadline for acceptance. Further it went to some trouble to explain the significance in the case of the evidence of Mr Peter Sivyer. It explained how his evidence established the contributory negligence of the plaintiff in failing to stay off the road and failing to keep a proper lookout.
  1. The plaintiff seeks to avoid this offer grounding an exercise of the discretion other than in the normal manner by arguing it was not unreasonable not to accept the offer at that time. In particular it complains that as at that time the third defendant had not disclosed the statutory declaration of Peter Sivyer dated 6 May 2008. As my reasons for judgment demonstrate Mr Sivyer’s evidence contributed substantially to my conclusions both as to liability and contributory negligence. His statutory declaration was not disclosed to the plaintiff by the third defendant until 13 August 2013, although the plaintiff received a copy of it from Mr Sivyer’s wife a fortnight earlier on 31 July 2013. However his statutory declaration was not the only document capable of putting the plaintiff on notice of the significance of Mr Sivyer’s evidence in a future trial of the matter.
  1. The letter of offer of 22 July 2010 not only summarised the effect of his evidence, it expressly alerted the plaintiff to the existence of Mr Sivyer’s statement “contained in the police report”. The plaintiff’s legal representatives appear to have had access to the content of that report. In any event even if they did not the content of the letter of offer of 22 July 2010 amply put the plaintiff on notice of the alleged significance of Mr Sivyer’s evidence. The plaintiff has not evidenced that it made any attempt to confer with Mr Sivyer until mid 2013 when the plaintiff’s counsel attended the accident scene and, I infer, some local enquiries were made.
  1. These circumstances weigh heavily against the plaintiff’s argument that it was not unreasonable not to accept the offer of 22 July 2010 by reason of the non-disclosure of Mr Sivyer’s statutory declaration. The reality is the plaintiff was already armed with some evidence of Mr Sivyer’s account of events. Further the letter of offer of 22 July 2010 itself provided information about Mr Sivyer’s likely account of events. Moreover, acting reasonably, the plaintiff’s representatives could have attempted to confer directly with Mr Sivyer years before they finally did so.
  1. The plaintiff’s complaints rings even more hollow when regard is had to the fact that at a time after Mr Sivyer’s statutory declaration had been disclosed the plaintiff on 3 October 2013 offered settlement in the sum of $460,000 plus standard basis costs and outlays. This demonstrates that even had the plaintiff been armed with Mr Sivyer’s statutory declaration in considering the third defendant’s offer of 22 July 2010 it is unlikely to have accepted the proposed settlement figure of $400,000.
  1. Against that background it was unreasonable for the plaintiff not to accept the third defendant’s offer of 22 July 2010 after the expiration of a reasonable period within which it could have made the enquires appropriate to assess its prospects of success in light of Mr Sivyer’s likely evidence. Allowing for the difficulty that the plaintiff’s legal representatives were acting for a German national who had returned home that process may have taken longer than might ordinarily be expected. However as already mentioned, the offer of 22 July 2010 did not impose a time limit for a response. Bearing in mind that effectively the same offer was being advanced at the compulsory conference stage a little over one and a half years later it is obvious the third defendant would have settled in the amount offered by it on 22 July 2010 even if the plaintiff was not in a position to accept the offer for some months.
  1. Giving full force in favour of the plaintiff to the logistical difficulties which may have confronted the plaintiff’s legal representatives in acting for an overseas client the plaintiff should, acting reasonably, have accepted the third defendant’s offer of 22 July 2010 by the end of that year. Prior to that time it is reasonable that the third defendant ought bear the plaintiff’s assessable costs given the plaintiff’s ultimate success in the proceeding. However after that time it is appropriate that the plaintiff bear the third defendant’s ongoing costs in respect of the proceeding.

Indemnity or standard?

  1. The third defendant submits that the costs order in its favour should be on an indemnity basis, citing the Victorian Court of Appeal in Chen v Chan (no 2)[22] where it was observed:

“Usually, an order for costs will be made an on a party/party basis.  But an order for costs on a solicitor/client or indemnity basis may be made where special or unusual circumstances have been demonstrated, for example, by establishing misconduct in the proceeding, that the proceeding was brought for an ulterior purpose, or that it was patently unreasonable to institute or maintain the proceeding.  Special circumstances may also include the making of an allegation of fraud which is not proved.”

  1. The third defendant submits there has been misconduct in the proceeding alleging:
  1. the plaintiff wrongly sought to prejudice the case by pleading the third defendant’s admission of liability of 50 percent pursuant to s 41 of the Motor Accident Insurance Act 1994 (Qld);
  1. the plaintiff placed the same non-binding admission before the court in an affidavit;
  1. on the eve of trial the plaintiff amended his reply to again plead the without prejudice admission and advance an application that it grounded an estoppel argument;
  1. the plaintiff’s lawyers withheld contact details for a witness after the plaintiff agreed in evidence to provide those details to the third defendant via the plaintiff’s solicitor;
  1. the plaintiff did not disclose a statement taken from witness Darryl Cobden until immediately before he was due to be cross examined;
  1. the plaintiff falsely suggested the plaintiff could not understand the English language
  1. The first three issues are connected and are best understood in the light of my ruling in respect of the application at the start of the trial. It is unnecessary to here repeat myself. I did not detect an illicit motive in respect of these events. They arise from a change of heart about the prospects of a legal argument about which legal minds might in good faith differ.
  1. The fourth issue was also ventilated during the trial. I have already accepted no deliberate impropriety was involved.
  1. As to the fifth and sixth issues the timing of the disclosure was, I infer, a product of oversight rather than forensic intent and I detected no falsity about the plaintiff’s representative’s comments as to the plaintiff’s command of English.
  1. It is not appropriate to order indemnity costs.

Relevant Scale

  1. Rule 697(4) of the UCPR provides that the costs the plaintiff may recover must be assessed as if the proceeding had been started in the District Court unless the court otherwise orders.
  1. Given, for the reasons explained, the plaintiff ought only have his costs up to and including 31 December 2010 and the claim was not filed until 2 March 2012, it is doubtful whether there would be any material difference in the quantum of any of its recoverable costs prior to that time assessed by reference to the Supreme or District Courts scales. However for reasons I have explained, the force of the third defendant’s case as to contributory negligence and the likely extent of the relevant apportionment may not have been reasonably apparent to the plaintiff earlier than 31 December 2010.
  1. Given the order I propose to make against the plaintiff in respect of costs is influenced by the point in time when it should have realised it was reasonable to settle its potential case I am satisfied that its costs up to that time should be assessed on the Supreme Court scale.

Reserved Costs

  1. Pursuant to rule 698 reserved costs would ordinarily follow the event unless the court otherwise orders. In light of my earlier conclusion as to the point in time when it became unreasonable for the plaintiff not to have accepted the third defendant’s offer of settlement it is appropriate that the third defendant should have its costs in respect of the various applications which occurred prior to trial, including the application which occurred on the first day of trial.

Mansi order

  1. In Mansi v O’Connor and Ors[23] Lyons J, in addition to ordering the plaintiff to pay the defendants’ costs from the date of the offer in that matter, ordered that the assessed costs ordered to be paid by the plaintiff be set off against the judgment sum and any assessed costs ordered to be paid by the second defendant prior to any payment by the second defendant to the plaintiff of or execution on the balance.
  1. The third defendant seeks a similar order here. The circumstances of the case favour such an order. The plaintiff is a German National without property in Queensland.  In his last disclosed document he did not have any employment.  Moreover the enforcement of a proceeding in Germany is difficult.  The third defendant has undertaken to proceed expeditiously to assessment of costs.  Having regard to that undertaking and the aforementioned circumstances, an order of the kind given in Mansi is appropriate.
  1. To allow for the possibility the undertaking of expedition is not honoured, I will give liberty to apply.

Orders

  1. My orders are:
  1. The third defendant pay the plaintiff’s costs on the standard Supreme Court scale up to and including 31 December 2010.
  1. The plaintiff pay the third defendant’s costs of and incidental to the action on the standard Supreme Court scale as and from 1 January 2011 including all costs in respect of applications including the orders made on 28 October 2011, 7 June 2013, 2 August 2013, 9 October 2013 and the costs reserved on the first day of trial.
  1. The assessed costs ordered to be paid by the plaintiff be set off against the judgment sum and any assessed costs ordered to be paid by the third defendant prior to any payment by the third defendant to the plaintiff of, or execution on, the balance after such set off.
  1. Liberty to apply in connection with the third defendant’s undertaking of expedition on the giving of three days notice in writing.

Footnotes

[1] Affidavit of Paul Richard Birkett 13 December 2013, Exhibit PRB2, 3; Affidavit of Jamie Gordon McAlister, Exhibit JGM1, 1.

[2] Affidavit of Paul Richard Birkett 13 December 2013, Exhibit PRB2, 6-7.

[3] Affidavit of Paul Richard Birkett 13 December 2013, Exhibit PRB2, 8; Affidavit of Jamie Gordon McAlister, Exhibit JGM2, 4.

[4] Ibid.

[5] Affidavit of Paul Richard Birkett 13 December 2013, Exhibit PRB2, 10; Affidavit of Jamie Gordon McAlister, Exhibit JGM2, 6.

[6] Affidavit of Paul Richard Birkett 13 December 2013, Exhibit PRB2, 11.

[7] Affidavit of Paul Richard Birkett 13 December 2013, Exhibit PRB2, 13; Affidavit of Jamie Gordon McAlister 17 December 2013, Exhibit JGM3, 7.

[8] Affidavit of Paul Richard Birkett 13 December 2013, Exhibit PRB2, 15; Affidavit of Jamie Gordon McAlister 17 December 2013, Exhibit JGM5, 10.

[9] Affidavit of Paul Richard Birkett 13 December 2013, Exhibit PRB2, 16; Affidavit of Jamie Gordon McAlister 17 December 2013, Exhibit JGM4, 9.

[10] Affidavit of Paul Richard Birkett 13 December 2013, Exhibit PRB3, 17.

[11] Affidavit of Paul Richard Birkett 13 December 2013, Exhibit PRB6, 23.

[12] Plaintiff’s Outline of Argument [8].

[13] [1975] 3 WLR 586.

[14] Affidavit of Paul Richard Birkett 13 December 2013, Exhibit PRB6, 24.

[15] Affidavit of Jamie Gordon McAlister 17 December 2013, [17](b).

[16] Ibid, [18].

[17] Affidavit of Jamie Gordon McAlister 17 December 2013, [19].

[18] [1975] 3 WLR 586.

[19] Leichhardt Municipal Council v Green [2004] NSWCA 341.

[20] Elite Protective Personnel v Salmon [2007] NSWCA 322.

[21] Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (no 2) (2005) 13 VR 435.

[22] [2009] VSCA 233 [10].

[23] [2012] QSC 374.

Close

Editorial Notes

  • Published Case Name:

    Habig v McCrae & ors

  • Shortened Case Name:

    Habig v McCrae

  • MNC:

    [2014] QSC 69

  • Court:

    QSC

  • Judge(s):

    Henry J

  • Date:

    07 Apr 2014

Litigation History

No Litigation History

Appeal Status

No Status