DISTRICT COURT OF QUEENSLAND

APPLICATION

1. [1]
   This is an application for summary judgment. The respondent (“the defendant”) drove a car into the house of the applicant’s (“the plaintiff’s”) and the claim is for damage to the house, with interest and costs.

2. [2]
   The issue primarily is whether this is a case for an award of indemnity costs in respect of both the claim and the application. The judgment was reserved for a determination of that issue.

3. [3]
   The claim was filed on 15 December 2006. The defence was filed on 30 January 2007. The Application was filed on 24 May 2007. The defendant admitted liability in his Defence but did not admit the quantum of damages.

4. [4]
   The plaintiffs served Notice to admit facts and Notice to admit documents on 18 April 2007. There was no response to the Notices. Accordingly pursuant to Rule 189 of the UCPR there was a deemed admission of the subject facts and documents. Hence quantum is no longer in issue. The Plaintiff’s submitted that the Notices particularised the quantum claim in sufficient detail to adequately inform the defendant to enable him to admit or deny the claim. He did neither of those things. He did not file a Notice of Dispute nor did he seek to inspect or copy any of the documents.

5. [5]
   The defendant did not appear on this application, which was filed on 24 May 2007.

COSTS

6. [6]
   The applicants submit that they are entitled to an order for indemnity costs pursuant to Rule 704(1) of the UCPR.

7. [7]
   Rule 704(1) provides the court with a discretion to award indemnity costs in some circumstances including, for example, where a defendant has simply used the litigation process to delay the inevitable outcome of having to pay the claim Plaintiffs’. The Rule provides as follows:

“704Indemnity basis of assessment

3. (1)
   The court may order costs to be assessed on the indemnity basis.

3. (2)
   Without limiting subrule (1), the court may order that costs be assessed on the indemnity basis if the court orders the payment of costs—

3. (a)
   out of a fund; or

3. (b)
   to a party who sues or is sued as a trustee; or

3. (c)
   of an application in a proceeding brought for non compliance with an order of the court.

3. (3)
   When assessing costs on the indemnity basis, the registrar must allow all costs reasonably incurred and of a reasonable amount, having regard to—

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

3. (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.”

THE AUTHORITIES

8. [8]
   The exercise of discretion to award indemnity costs has been discussed in a number of authorities.

9. [9]
   In Colgate Palmolive v Cussons Pty Ltd  (1993) 118 ALR 248, Sheppard J in the Federal Court of Australia stated the following (at p 256-257):

“In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis.  The circumstances of the case must be such as to justify the court in departing from the usual course.  That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England.  The tests have been variously put.  The Court of Appeal in Andrew v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client ‘as and when the justice of the case might so require’.  Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he then was) in Preston v Preston (1952) 1 All ER at 58 namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice.  Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding it in the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule.  But as French J said (at 8) in Tetijo:  the categories in which the discretion may be exercised are not closed”.

His Honour continued (p257):

“The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis”; and “the costs are always in the discretion of the trial judge.  Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.”

10. [10]
    See also Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 141 ALR 727, approved in Naomi Marble & Granite Pty Ltd v FAI General Insurance Comp. Ltd  (unreported SCQ 12.06.98) where Sheperdson J stated that these principles were equally applicable to the Supreme Court; and Re Talk Finance & Insurance Services Pty Ltd (1994) 1 Qd R 558. I note also the decision of Ambrose J in Mitchell v Pacific Dawn Pty Ltd (2003) QSC 179.

11. [11]
    There is no definitive list of facts and circumstances that might take a particular case outside the usual course of an exercise of discretion, but conduct by one party in unreasonably disputing a claim or advancing an unsustainable defence, may give rise to an exercise of discretion against that party and to an award of indemnity costs.

12. [12]
    See also Afzal v Ford Motor Co Ltd  (1994) 4 All ER 770 and Willis v Redbridge Health Authority  (1996) 3 All ER 114.

13. [13]
    However, what is or is not “unreasonableness” may be difficult to determine.

14. [14]
    In Police Association of New South Wales v Higgins  (1997) FCA 4/6/1997 an application for indemnity costs was refused.  The Plaintiff, despite a reasonable offer in the circumstances of the case by the defendant (that each party pay it’s own costs if proceedings were dismissed), continued the litigation and lost, despite detailed cross examination of the defendant outside the issues and in the face of a contention that the claim was groundless.  The Court considered that the claim was not unreasonable as a matter of fact or law.

15. [15]
    In Vignoli v Sydney Harbour Casino Pty Ltd  (1999) NSWSC 1227 indemnity costs were awarded from the date of filing the defence to the date of admission of liability, where the defence was unjustifiable and the defendant should have known the defence had no chance of success.

16. [16]
    There are also numerous authorities on lack of diligence or negligence by lawyers in the conduct of litigation, where indemnity costs have been awarded in favour of the other party. Similarly, the rules relating to Offers to Settle involve indemnity costs in some circumstances. However, I do not need to refer to such authorities or rules here.

17. [17]
    For the exercise generally of the discretion in the District Court, see also Boardmore v Franklins Management Services Pty Ltd  (2003) 1 Qd R 1.

18. [18]
    In Bateman v Newhaven Park Stud Ltd (2004) NSWSC 875, an order for indemnity costs was refused in respect of interlocutory applications.  An order for costs was made, but the basis of the award is not relevant to this case.  Insofar as the issue of indemnity costs was concerned, the consideration was whether there was “some unreasonable conduct on the part of the party against whom costs were awarded”, such as to warrant an indemnity costs order.  “The inquiry…… is as to “relevant delinquency” (Oshlock v Richmond River Council (1998) 193 CLR 72) or “unreasonable conduct, albeit that it need not rise as  high as vexation” (Rosniak v GIO (1997) 41 NSWLR 608.”

19. [19]
    In Kingsheath Club of the Clubs Limited (in liq) (2003) FCA 1589, the Federal Court refused an application for indemnity costs.  In the course of the judgment by Goldber J, His Honour said:

“So far as the costs of the substantive proceeding are concerned, it has been submitted on behalf of the opposing parties that I should award costs on an indemnity basis consistently with the observation of Woodward J in Fountain Selected Meat (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 where his Honour said at 401:

“I believe that it is appropriate to consider awarding ‘solicitor and client’ or ‘indemnity’ costs, whenever it appears than an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success.”

The opposing parties have submitted that this is such a case.  However, when applying the approach considered by Woodward J one should not forget the observation which his Honour then made:

“In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law.  Such cases are, fortunately, rare.  But when they occur, the court will need to consider how it should exercise its unfettered discretion.”

That observation was picked up and applied by the Full Court in Hamod v New South Wales (2002) 188 ALR 659 at 664-665.”

SUMMARY JUDGMENT

20. [20]
    Summary Judgment may be ordered pursuant to Rule 292 Uniform Civil Procedure Rules where there is no real prospect of a defendant “successfully defending all or part of the plaintiffs’ claim and there is no need for a trial of the claim or the part of the claim.” An order for summary judgment is a final order that disposes of the litigation: See Mitchell v Pacific Dawn Pty Ltd (supra).

21. [21]
    The conduct of the litigation by the plaintiffs is unremarkable. They have observed the time limits and acted appropriately, to the extent that I can determine, throughout the litigation.

22. [22]
    The defendant on the other hand was given the opportunity to decide whether quantum was in fact in issue, but failed to use that opportunity. The Notices to Admit are said to have set out the quantum issues clearly. Had the defendant had any further issue with quantum then a timely response to the Notices should have been made. It was not made and no response has been made to date.

23. [23]
    In the circumstances, the defendant prima facie has no defence to the action. The grounds for summary judgment being awarded have been made out.

DECISION

24. [24]
    On the issue of costs it seems to me that, in the absence of the defendant having taken the opportunity to determine the issue that he did not admit on the pleadings, in the way provided for in the UCPR, an order for indemnity costs is open for consideration upon an exercise of judicial discretion.

25. [25]
    The following matters are relevant to the exercise of that discretion. In my view the defendant has not acted unreasonably in not admitting the quantum of the claim in the Defence. Liability was admitted. However the Notices to Admit are said to have provided sufficient particularity in respect of quantum to satisfy the defendant’s uncertainty about the quantum claim raised in the defence by his non-admission. To not then, having been provided with particulars of the quantum in the Notices, admit the quantum of the claim or any part of it or to file a notice of dispute was in my view unreasonable.

26. [26]
    In my view a partial award of indemnity costs is justified on the facts and circumstances of this case, from and including the preparation of the Notices, to and including the hearing and determination of the application. Apart from that, the balance of the costs of and incidental to the action should be standard costs. I do not think it can be said that the Plaintiffs’ decision to litigate in the first instance was unreasonable or vexatious.

27. [27]
    ORDERS

1. Judgment be entered for the Plaintiff’s against the Defendant in the sum of $52 737.58 together with the interest in the sum of $7 334.14.

2. The Defendant pay the Plaintiff’s costs of and incidental to the Notices to Admit and the Application on an indemnity basis.

3. The Defendant pay the balance of the Plaintiff’s costs of and incidental to the action on the standard basis.