Ross v Leach[2014] QCA 144

SUPREME COURT OF QUEENSLAND 

1. THE COURT:  On 30 May 2014, this Court ordered that the appeal in this matter be dismissed with costs.  Neither party during the hearing, nor when the orders were made in open court, intimated that it was proposed to make submissions on costs or that there was any reason why costs should not follow the event.  Subsequently, the respondent sought and was given permission to make written submissions on costs.  Those submissions, received by the Court on 10 June 2014, were to the following effect.

2. The respondent’s solicitors made an offer to the appellant’s solicitors on 1 April 2014 to settle the appeal on the basis that:

“1.The Appeal be dismissed; and

2. Each party bear their (sic) own costs of the Appeal.”

3. The offer was stated to have been made in accordance with the principles stated in Calderbank v Calderbank^[1] and was open for acceptance until 4.00 pm on 4 April 2014.  The offer was not accepted.

4. A Calderbank letter should “predispose the court to order that the offeror should be entitled to indemnity costs from the date of service of the letter”.^[2]

5. The appellant knew or ought to have known that his prospects of success in the appeal were hopeless. Accordingly, he should be ordered to pay the respondent’s costs on the indemnity basis after 1 April 2014 and on the standard basis prior to that.

6. The respondent relied on statements of principle in the reasons in Di Carlo v Dubois & Ors;^[3] Rosniak v Government Insurance Office;^[4] Emanuel Management Pty Ltd (in liq) v Foster’s Brewing Group Ltd;^[5] Todrell Pty Ltd v Finch (No2);^[6] and Smits v Tabone; Blue Coast Yeppoon Pty Ltd v Tabone.^[7]

7. None of these cases provides much in the way of support for the respondent’s argument. The passage quoted from Di Carlo in the respondent’s outline of argument is principally concerned with the general principles expounded by Sheppard J in Colgate-Palmolive Company & Anor v Cussons Pty Ltd.^[8]  The point of the quotation appeared to be to draw attention to the identification of the “wilful disregard of known facts”; “the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; [and] the imprudent refusal of an offer to compromise” as factors capable of justifying an indemnity costs order.

8. It was submitted that Rosniak was authority for the proposition that departure from the usual party and party basis for a costs order was not confined to circumstances in which the party the subject of the order had been “ethically or morally delinquent”.  The following passage from the reasons was quoted:^[9]

“… the court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation. This is because party and party costs remain the norm, although it is common knowledge that they provide an inadequate indemnity. Any shift to a general or common rule that indemnity costs should be the order of the day is a matter for the legislature or the rule-maker.” (references omitted)

9. In Todrell, Chesterman J, referring to Emanuel, said:^[10]

“… I pointed out that that test [i.e. in Rosniak] is inexact. The test which I myself adopted in that case, and others, was whether there was something irresponsible about the conduct of the losing party which exposed its opponent to costs which should, in fairness, be ordered on the indemnity basis.”

10. The passages from Smits quoted in the outline added nothing for present purposes, to what had been extracted from Colgate-Palmolive.  The qualifying factor for the indemnity costs order sought by the respondent was that the appellant knew or ought to have known that his claim was hopeless.  It was submitted that the appellant’s argument “regarding the meaning of ‘falling out’ when viewed against the uncontested evidence at trial as to the nature of the relationship between the parties was bound to fail”.

11. We do not accept the premise underlying the respondent’s argument. The appellant’s case on appeal was presented succinctly and persuasively. It was rejected but it could not be described as “hopeless”. It had more merit than the argument advanced on behalf of the respondent on the appeal that the “finality principle” prevented the appellant from arguing that a “falling out” incident had occurred in November or December 2006.  It is relevant to the exercise of the discretion in relation to costs that the respondent’s offer was made well after the appellant’s outline in reply had been filed and served and only about three weeks prior to the hearing of the appeal.

12. Counsel for the appellant submitted that the appellant did not act unreasonably in failing to accept what amounted substantially to an invitation to abandon his appeal. There is some force in this submission.

13. Having regard to the above considerations, there is no sufficient reason to interfere with the costs order already made. There will be no order as to costs in respect of the further submissions on costs.