Hook v Boreham[2006] QDC 304

DISTRICT COURT OF QUEENSLAND

1. [1]
   In this claim for damages for personal injuries I gave judgment for the Plaintiff on 22 August 2006 for $98,999.02. Thereupon the Plaintiff sought a costs order in terms which were, however, resisted by the Defendants. The parties were invited to deliver further written submissions on costs, and did so.

2. [2]
   The Plaintiff seeks an order that the Defendants pay her costs assessed by reference to a costs agreement entered into between her and her solicitors. The Defendants submit an order of that kind is precipitate and that the Court should do no more than direct that the Defendant pay the Plaintiff’s costs, on an indemnity basis. The issue concerns the procedures arising under the Uniform Civil Procedure Rules (UCPR) for assessment of costs; and, whether the court can, or should make orders at this stage about the basis of assessment.

3. [3]
   In Counsel’s written submissions^[1] the Defendants do not dispute that any costs order should be on an indemnity basis.  That is an appropriate order here, where the best offer made by the Defendants under the Motor Accident Insurance Act 1994 was $30,000 and, under the UCPR, $47,500 plus standard costs in the sum of $2,500.  The judgment was also in excess of the Plaintiff’s best offer which, under the Act, was $60,000 plus costs and, under the UCPR, $51,001 plus costs and outlays assessed on the standard basis.

4. [4]
   Under UCPR r 704(3):

[r 704 Indemnity basis of assessment]

704 (1) The court may order costs to be assessed on the indemnity basis

...

(3) when assessing costs on the indemnity basis, the Registrar must allow all costs reasonably incurred and of a reasonable amount, having regard to –

1. (a)
   the scale of fees prescribed for the court; and

2. (b)
   any costs agreement between the party to whom the costs are payable and the party’s solicitor; and

3. (c)
   charges ordinarily payable by a client to a solicitor for the work.

5. [5]
   Although for some purposes costs on an indemnity basis are the equivalent of the former “solicitor and client” costs^[2], it has been said they are to be assessed in a more liberal way.  In Bottoms v Reser [2000] QSC 413 the Chief Justice was dealing with a reference from a Registrar assessing costs^[3].  The costs ordered by the trial judge had been on a “solicitor and own client” basis and the Registrar apparently asked for guidance.  In discussing the meaning of indemnity costs under r 704 the Chief Justice said:

That encompasses all costs except so far as they may be of unreasonable amount or where unreasonably incurred.  For recent examples of that formulation, see Helljay Investments Pty Ltd v Deputy Commissioner of Taxation [1999] HCA 56 at paragraphs 26 and 27 per Hayne J and Patrick Stevedores (Number 2) Pty Ltd v The Proceeds of Sale of Michael V Skulptor Komenkov [2000] FCA 1710 at para 11 per Tamberlin J.  That approach is confirmed in the terms of r 704(3) which requires the Registrar to allow “all quotes reasonably incurred and of a reasonable amount”.

In approaching such an assessment, the Registrar ought to be conscious of the caution of the Vice Chancellor in EMI that in determining reasonableness, “the receiving party will be given the benefit of any doubt” (see p 74).  In other words, considerable liberality should ordinarily be extended in assessing reasonableness.  That is indeed implicitly recognised by the reference in paragraph (b) of subrule 3 to any costs agreement between a client and the client’s solicitor.  It would perhaps be an unusual case where, costs having been agreed in that way, they were then, on this process of assessment, to be excluded as “unreasonable”.  Plainly however if they warranted characterisation as outlandish, they ought no doubt nevertheless to be excluded.

I emphasise my view in that such an assessment, no niggardly or unduly narrow approach would be warranted ... it would be odd, in short, if parties, having agreed upon an indemnity assessment, contemplated the possibility of a Registrar’s substantially cutting back upon the cost to be allowed, thereby leaving the donee of the order bereft of the indemnity envisaged.  That is why the ultimate limitation is itself restricted to the unreasonable, but “unreasonable” viewed in the overall context – which invites consideration expressly in the terms between the client and the solicitor.

6. [6]
   Chapter 17 Pt 2 of the UCPR plainly envisages a scheme under which courts make orders that costs be assessed on one of two bases (standard or indemnity) but, thereafter, assessment of those costs (and the discretions which arise about them under the UCPR) is vested, at first instance, in the Registrar: rr 684, 685, 706 and 707.  If the Registrar is concerned about matters arising in the course of assessment, there may be a reference to the court: r 706(3).  Division 7 is directed to the circumstance where a party is unhappy with the Registrar’s assessment.  There is a process for objections and, ultimately, review by the court under r 742.

7. [7]
   The course proposed by the Claimant would, in the context of those rules and procedures, place a preliminary fetter upon the Registrar’s discretion under r 704 which neither that rule nor other parts of the Chapter appear to contemplate. For that reason alone it would, it seems to me, be a rare circumstance in which a court would make an order of the kind sought.

8. [8]
   Even if that were not so, this is not a case in which interference would be appropriate. The Defendants’ written submissions argue that the costs agreement between the Claimant and her solicitors^[4] is not one which should be considered by the Registrar, and indicate that the Defendants will contend it is void under s 48F(1) of the Queensland Law Society Act 1952^[5].  This is just the kind of dispute to which r 704(3) appears to be directed, and which the rule preserves (at first instance) to the jurisdiction of the Registrar.

9. [9]
   Mr Williams of Counsel, for the Claimant, referred to the Reasons for judgment of  McGill QC, DCJ in Henley v State of Queensland [2005] QDC 094, a decision in which the court was asked to review a decision of a Deputy Registrar about costs, under r 742.  The matter had its own inherent complexities but I accept that it contained, in part, a decision of this court touching circumstances in which a Registrar had (it was held) been wrongly reluctant to accept an assessment of indemnity costs undertaken pursuant to a costs agreement.  That does not, however, mean an assessment here will necessarily involve a similar error.

10. [10]
    For these reasons, the appropriate order is that ordinarily required under r 680 which, here, will be that the Defendants ought to pay the Claimant’s costs of and incidental to the claim, assessed on the indemnity basis.