SUPREME COURT OF QUEENSLAND

[1]  HOLMES JA:  On 15 June 2010, this court dismissed the applicants’ application for leave to appeal against a District Court judgment further extending a limitation period under s 57(2)(b) of the Motor Accident Insurance Act 1994 (Qld).  Therespondent now seeks his costs of that application on an indemnity basis, on the strength of Calderbank offers and what he says is the poverty of the applicants’ arguments on appeal. 

[2]  The history of the respondent’s offers to settle is as follows.  On 17 December 2009, his solicitors wrote to the applicants’ solicitors, advising that they considered them to have poor prospects of success on their foreshadowed appeal, and would seek the respondent’s costs on the indemnity basis if it failed.  On the other hand, the respondent was prepared to forego the costs he had incurred in briefing counsel if the appeal did not proceed.  Undeterred, the applicants’ solicitors served a notice of appeal a few days later.  On 5 February 2010, the respondent’s solicitors wrote again, reiterating their view of the appeal’s poor prospects, making what was expressed to be a Calderbank offer, that if the appeal were withdrawn within seven days no costs would be sought, and warning again that if it proceeded and failed, costs would be sought on the indemnity basis.  The respondent’s solicitor deposes to the respondent’s willingness and ability to carry out the offer.

[3] As well as relying on those offers, the respondent contends that the primary judge’s reasons for extending the limitation period were unremarkable and met with the unanimous approval of this court; that the applicants failed to establish any different legal principle from those applied; and that the applicants had abandoned their principal argument, as to the effect of an earlier consent order for extension of the limitation period.  The respondent’s claim was a modest one; the applicants had admitted liability; and there was no prejudice occasioned to the applicants by the respondent’s delay.  The applicants were merely attempting to transfer their admitted liability to the professional indemnity insurer for the respondent’s solicitors.  The application for leave to appeal was unreasonably instituted and unreasonably maintained, in light of the offers made.

[4] The applicants argued that the making of an offer of compromise would not, of itself, justify an order for indemnity costs.  Their arguments on the leave application had not been wholly unmeritorious, nor were they made for an ulterior purpose; they were based on authorities of this court which, as it happened, were distinguished in the reasons for judgment.  The respondent had not put on any material to show that his solicitor/client costs would exceed costs on a standard basis.

[5] The applicants are right in contending that the refusal of a Calderbank-type offer of compromise would not inevitably result in an order for indemnity costs.  Such orders require some unusual feature to justify them; for example, that the “conduct of the party against whom the order is sought is plainly unreasonable”[1] or falls within one of the particular categories of misconduct identified by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd. [2]

[6] It is not really correct to say that the applicants in this case abandoned their principal argument during the appeal.  Their argument at all times turned on the applicability of this court’s decision in Spencer v Nominal Defendant[3] to the facts of the present case, although their contentions as to the effect of the decision and of the terms of the contract supposedly embodied by the consent order did have a certain fluidity about them.  There is some force in the respondent’s submission that the applicants’ conduct in seeking to appeal smacked of the opportunistic, in circumstances where the delay which had occasioned the need for the District Court judge’s order was brief (one week) and caused no prejudice.  The second applicant, of course, was a statutory insurer, and one might question whether its conduct was in conformity with the objects of the Motor Accident Insurance Act, one of which is “to encourage the speedy resolution of personal injury claims resulting from motor vehicle accidents”.[4]

[7] But it cannot be said that the applicants’ arguments were entirely without merit, although they were not, in the event, accepted.  The case does not possess the unusual feature or features which would justify the court from departing from the usual order for costs.  The applicants should pay the respondent’s costs of the application for leave to appeal on the standard basis.  The respondent should pay the applicants’ costs of this application.

[8]  CHESTERMAN JA:  My impression of this matter was that the applicant’s conduct in bringing and prosecuting its application for leave to appeal was unreasonable to the extent justifying an award of indemnity costs against him.  Holmes JA and Atkinson J think the unreasonableness of the conduct is insufficient to form a basis for such an order.  The conduct in question is close to the borderline and I defer to my colleagues’ opinion.  I therefore agree with the order for costs proposed by Holmes JA.

[9]  ATKINSON J:  I agree with the orders proposed by Holmes JA and with her Honour’s reasons.