Favell v Mbuzi[2005] QDC 383

DISTRICT COURT OF QUEENSLAND

1. [1]
   Judgment was delivered in this proceeding on 18 November last at which time the parties were heard on the question of costs.

2. [2]
   It was submitted that the plaintiff had delivered to the defendant a formal Offer To Settle pursuant to Part 5 of Chapter 9 of the Uniform Civil Procedure Rules (“UCPR”) on the basis that he would accept the sum of $1,000.00 “In full and final settlement of this claim”.  This Offer To Settle dated 22 September 2005 was delivered to the defendant by the plaintiff’s solicitors under cover of letter of the same date by prepaid registered post and was open for acceptance by the defendant for a period of 21 days.

3. [3]
   It would appear that the only response by the defendant to the plaintiff’s Offer To Settle was the delivery by him of a document styled “Counter Offer To Settle” dated 9 October 2005. While this document is not in the orthodox form it purports to waive the claim for costs “….that may be available to me (the defendant)” if the plaintiff immediately discontinued his claim.^[1]

4. [4]
   At the hearing on the 18 November the defendant referred also to a further document dated 12 October 2005 which purports to be “another counter-offer” in which “1. In full and final settlement of this the defendant offers five hundred dollars ($500.00)”.^[2]  This additional offer is of no consequence in the matter.

5. [5]
   Neither the plaintiff’s Offer To Settle nor the defendant’s counter offer(s) was/were accepted by either party.

6. [6]
   In this proceeding there are also reserved costs occasioned by the defendant’s application to set aside the judgment by default obtained by the plaintiff against the defendant on 27 April 2005. The hearing of this application was heard by his Honour Judge Brabazon QC on 8 and 15 August 2005 referred to in paragraph [12] of the judgment delivered on 18 November 2005.

7. [7]
   Brabazon QC DCJ set aside the judgment by default on limited grounds and reserved the costs of the application.

8. [8]
   Rule 360 of the UCPR relevantly provides:

“Costs if Offer To Settle by plaintiff

3. (1)
   If—

1. (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

2. (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.

3. (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.”

9. [9]
   Rule 361 of the UCPR relevantly provides:

“Costs if Offer To Settle by defendant

3. (1)
   This rule applies if—

1. (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

2. (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.

3. (2)
   Unless a party shows another order for costs is appropriate in the circumstances, the court must -

1. (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

2. (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.”

10. [10]
    The quantum of the judgment delivered in this matter was “no less favourable than the Offer To Settle” delivered by the plaintiff.

11. [11]
    Plaintiff’s counsel therefore seeks an order for costs in terms of Rule 360 of UCPR including reserved costs on the same basis.

12. [12]
    In his response the defendant reminded the court that he was successful in setting aside the default judgment application.

13. [13]
    Where a judgment by default is set aside it is usual for an order to be made that the successful applicant pays the respondent’s costs of that application on the basis that the court is granting the successful applicant an indulgence in circumstances where the original judgment may have been regularly entered in accordance with the Rules of the Court as was the case in this instance.

14. [14]
    On the question of when any offer to settle may be delivered in a proceeding in the matter of Fail v Hutton & Suncorp Metway Insurance Limited [2003] QSC 291 Moynihan SJA ordered that the defendant pay the plaintiff’s costs of the action on an indemnity basis even though the plaintiff’s first Offer To Settle was made “on the first working day after trial”.

15. [15]
    This decision would seem to highlight the “pressure on a party to consider an offer made in accordance with the Rules”^[3] whenever an Offer To Settle is made irrespective of when the offer is made in the course of the proceeding so long as it is made “at any time before final relief is granted”.^[4]

16. [16]
    While this indulgence to a party at such a late stage in the proceeding might seem to be over-generous the combination of Rules 354(1)(b) and 360 of UCPR clearly allow for it and the offeree has a steep hurdle to overcome to avoid an order for indemnity costs for the whole proceeding being made in favour of the offeror if the offer satisfies Rule 360(1)(a).

17. [17]
    The reason I refer to these matters is to emphasise that it would appear that it is open for a party to a proceeding to make an offer to settle “at any time” in the course of the proceeding however late that might be and still receive the benefit of the Rules relevant thereto.

18. [18]
    In reaching my decision in this matter I take into account that while the hearing of the application to set aside judgment by default is a part of these proceedings it is not strictly a part of the argument on the merits of the claim and defence in which the plaintiff has been successful and in the current circumstances therefore entitles him to the benefit of Rule 360 of the UCPR.

19. [19]
    Taking all matters into account and in the exercise of my discretion on the question of costs my orders will be as follows:

1. The defendant pay the plaintiff his costs of and incidental to the action calculated on an indemnity basis under the Magistrates Court scale, save that the plaintiff’s costs of and incidental to the application to set aside judgment by default including reserved costs, be paid by the defendant on a standard basis under that scale.

2. I certify that the attendance of both counsel and solicitor at the trial of this proceeding was necessary.