Hill v Robertson Suspension Systems Pty Ltd (No. 2)
[2009] QDC 305
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- Unreported Judgment
- Hill v Robertson Suspension Systems Pty Ltd (No. 2)[2009] QDC 305
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Hill v Robertson Suspension Systems Pty Ltd (No. 2)[2009] QDC 305
Hill v Robertson Suspension Systems Pty Ltd (No. 2)[2009] QDC 305
DISTRICT COURT OF QUEENSLAND
CITATION: | Hill v Robertson Suspension Systems Pty Ltd (No. 2) [2009] QDC 305 |
PARTIES: | GAIL MAREE HILL & ORS Plaintiffs AND ROBERTSON SUSPENSION SYSTEMS PTY LTD Defendant |
FILE NO/S: | BD333/09 |
DIVISION: |
|
PROCEEDING: | Application |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 24 September 2009 |
DELIVERED AT: | Brisbane |
HEARING DATE: | (written submissions only) |
JUDGE: | McGill DCJ |
ORDER: | Order as to costs made 19 June 2009 not varied. |
CATCHWORDS: | COSTS – Indemnity Costs – whether justified – conduct of party – whether failure to accept offer to compromise Di Carlo v Dubois [2002] QCA 225 – applied. Greenhalgh v Bacas Training Ltd [2007] QCA 365 – considered. John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd (1994) 52 FCR 201 – not followed. Lawes v Nominal Defendant [2007] QCA 437 – cited. Remely v O'Shea [2008] QCA 111 – applied. Rosniac v Government Insurance Office (1997) 41 NSWLR 608 – cited. |
COUNSEL: | S.D. Anderson for the defendant |
SOLICITORS: | Carter Newell Lawyers for the plaintiffs Platinum Lawyers for the defendant |
- [1]In this matter on 20 March 2009 default judgment was given by a deputy registrar. An application to set aside the default judgment came on before another judge on 25 May 2009. It was adjourned to 9 June, and directions were given for the exchange of material. On 9 June I heard submissions and reserved my decision, which was delivered on 19 June 2009: I then set aside the default judgment, declared effectual a notice of intention to defend and defence filed on 2 June 2009, and ordered the plaintiffs to pay the defendant’s costs of the application to be assessed. When judgment was delivered I gave the defendant leave to make submissions in writing that the costs should be assessed on the indemnity basis. Such submissions were filed on 13 July 2009, and submissions in reply on behalf of the plaintiffs were filed on 3 August 2009. On 2 July 2009 an affidavit of the solicitor for the defendant was also filed.
- [2]The defendant submitted that it was appropriate to award costs on the indemnity basis because the defendant had proposed on at least two occasions that the plaintiffs consent to the judgment being set aside, without any requirement that the plaintiffs pay the costs of the defendant of the application, so that the ultimate outcome was more favourable to the defendant than what had been offered. Accordingly, it was submitted that the failure of the plaintiffs to accept the offers, and thus avoid the necessity for the application to be pursued, at least on a contested basis, was unreasonable. It was also submitted that it was relevant to take into account that in my earlier reasons I had criticised the way in which the claim had been pleaded, which involved an assumption as to the correct appropriation by the plaintiffs of certain payments made or alleged to have been made on behalf of the defendant, and that there had been an unreasonable failure on the part of the plaintiffs properly to serve the judgment that was obtained.
What happened
- [3]After the defendant’s solicitors found out about the judgment (by a search of the court index), they wrote on 23 April 2009 advising that they had instructions to apply to set aside the judgment, asserting that it had been obtained irregularly (though without explanation other than that the defendant had received no documents in respect of the action) and that in any case it appeared that the payments made by the defendant had not been properly credited. Copies of the documents were provided under cover of a letter of 27 April 2009 which indicated that instructions were being sought. Nothing further was heard from the plaintiffs’ solicitors prior to 11 May, when the application to set aside the default judgment was filed and served under cover of a letter of the same date. On 22 May the plaintiffs’ solicitors gave notice requiring “your client” for cross‑examination on the return date. Presumably there was no cross‑examination on that date; there was certainly no cross‑examination before me, nor was it sought. On 28 May the defendant’s solicitors wrote, drawing attention to the orders made on 25 May, pointing out that certain invoices had not been supplied and suggesting that there were discrepancies with the accounting records.
- [4]When the application came on on 9 June 2009 there was initially no appearance for the plaintiffs. Counsel for the defendant offered to contact their solicitors, and subsequently a representative of the then solicitors for the plaintiffs appeared, and the matter was mentioned at about 11.15 am, but stood down until not before 2.30 pm. As I recall, at that time I raised the question of whether the judgment had been regularly entered, and that representative was not then in a position to respond on that issue. After 2.30 pm the matter came on with the plaintiffs represented by their then solicitor, and the defendant by counsel, and the matter was argued.
- [5]The affidavit from the defendant’s solicitor exhibits a copy of a letter sent on 11 June, but does not depose to what happened on 9 June 2009, nor does it verify as correct the contents of that letter. Strictly speaking, therefore, there is no evidence that what was alleged in the letter to have occurred that day had actually occurred. In one respect at least the letter overstates the matter; I did not indicate that the defendant’s application would be successful, but rather that that was a provisional view in respect of which I was prepared to hear argument; hence the matter being stood down. The letter went on to allege that there was an agreement between the solicitors that the judgment would be set aside, with only the question of costs being debated, and that when the matter was called on the plaintiffs’ solicitor resiled from that agreement. The affidavit exhibits correspondence from the plaintiffs’ solicitors to the effect that such an agreement was denied. It is obviously impossible for me to resolve the rights and wrongs of that, and I am content to disregard that issue on the basis that strictly speaking there is no evidence of it before me.
- [6]In these circumstances the situation is simply that, as soon as the defendant became aware of the default judgment, an application to set it aside was foreshadowed. There was no real response from the plaintiffs’ solicitors prior to the time when the application was filed and served, and it does not appear that anything of significance happened thereafter except that the application was argued and resolved.
- [7]The point as to regularity of the judgment involved a defective affidavit of service, but I suppose the question of whether the affidavit was adequate was arguable. The plaintiffs’ solicitor can at least point to the fact that it was good enough to be accepted by a deputy registrar. In my view, however, the strict compliance with the rules necessary for a default judgment had not been achieved, for reasons given earlier. The issue as to whether there was a defence on the merits was perhaps more complicated, but I do not consider that there was any inappropriate conduct on the part of the plaintiffs’ solicitor in submitting that no such defence had been shown. The mere fact that the plaintiffs’ position ultimately did not succeed does not mean that it was inappropriate to have advanced it, or defended it.
- [8]It is not at all clear that there ever really was anything in the way of a proper offer to settle the application to set aside the default judgment. Had there been, the fact that the opportunity was not taken in this way to avoid the necessity for the application to be argued before the court, and decided, would in my opinion have been a relevant consideration in relation to costs, including the question of whether costs should be on the indemnity basis. I do not consider that the deficiency in the way in which the plaintiffs’ framed their claim was a matter which would support such an order, nor the failure properly to serve the judgment; there is no requirement under the rules that the judgment be served once it has been obtained. There was certainly no offer to settle in a formal sense under the UCPR; indeed, such an offer cannot be made under the rules in relation to an application in a proceeding, as distinct from a claim or perhaps an originating application.
Authorities
- [9]The making of an order for costs on the indemnity basis was discussed by the Court of Appeal in Di Carlo v Dubois [2002] QCA 225. In that decision, White J, with whom the other members of the court agreed, at [37] summarised the analysis in Colgate-Palmolive Co. v Cussons Pty Ltd (1993) 46 FCR 225, and said at [40]:
“It is important that applications for the award of costs on the indemnity basis not be seen as too available when a particular party against whom the order is sought is seen to carry responsibility for the state of affairs calling for a costs order without some further facts analogous to those mentioned in Colgate and other considered decisions.”
- [10]Her Honour had also cited the judgment of the Court of Appeal in New South Wales in Rosniac v Government Insurance Office (1997) 41 NSWLR 608 at 616:
“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 … .”
- [11]More recently, in Remely v O'Shea [2008] QCA 111 the Court of Appeal ordered indemnity costs in respect of an application for leave to appeal in circumstances where an offer to settle the appeal on terms more favourable than were achieved had not been accepted, where the appellant had pursued some hopeless contentions in the appeal, and where there were aspects of the appeal which had unnecessarily increased the costs of the proceedings. At [9] the court said that:
“The appellant’s failure to accept the second respondent’s offer … is appropriately to be stigmatised as being so unreasonable as to justify the award of indemnity costs in the second respondent’s favour.”
- [12]Those decisions of the Court of Appeal do not encourage the making of orders for indemnity costs too readily. They require conduct which is not merely shown to be unjustified, but is at least unreasonable, and it may be that not all unreasonable conduct will result in an order for indemnity costs. In the present matter I am not persuaded that there was anything that amounted to misconduct on the part of the plaintiffs or their legal advisers, nor was the position contended for on the hearing of the application so unreasonable as to qualify for some special reprobation.
- [13]As to whether there was a failure to accept an offer which in the event would have been more favourable, it is not at all clear to me that there ever was an offer made which the plaintiffs did not accept. It was submitted on behalf of the plaintiffs that in any case, the mere making and rejection of an offer, which if accepted would have been more favourable, would not without more justify an order for costs on the indemnity basis, in reliance on John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd (1994) 52 FCR 201. In that matter Hill J analysed part of the decision in Colgate-Palmolive (supra), particularly the reference to a case where there had been “an imprudent refusal of an offer to compromise” and included that the mere making of a Calderbank offer and its rejection did not, without more, justify an order for costs on an indemnity basis: p 206.[1]
- [14]At pp 204-5 his Honour considered a number of authorities cited in Colgate-Palmolive (supra), and was concerned to distinguish the New South Wales authorities on the basis that the New South Wales rules contained a mechanism for an offer to settle, which provided for the payment of indemnity costs in certain circumstances analogous to Chapter 9 Part 5 of the UCPR, and were to be distinguished from the Federal Court rules then in place, so as to make that approach inapplicable in the Federal Court. It seems to me that as a result his Honour’s comments are not applicable in Queensland, where there is that provision in the UCPR.
- [15]Furthermore, in Greenhalgh v Bacas Training Ltd [2007] QCA 365 the Court of Appeal ordered that costs of an appeal, incurred after the expiration of an offer that the plaintiff would allow the appeal to be withdrawn within the next seven days without seeking an order for costs, be assessed on the indemnity basis. The court noted at [5] that:
“The defendants chose to continue an application for leave to appeal which had little prospect of success, and should clearly have understood that they did so at their peril so far as the costs of the application were concerned.”
- [16]That a failure to accept an offer of settlement which proves to be more favourable will not necessarily lead to indemnity costs for an appeal is shown by the decision of the Court of Appeal in Lawes v Nominal Defendant [2007] QCA 437. Nevertheless, it seems to me that Greenhalgh stands as authority which contradicts the approach adopted by Hill J, as is appropriate given the difference between the Queensland rules and the Federal Court rules his Honour was then considering.
- [17]The position in Queensland in relation to appeals seems to be that indemnity costs may be awarded if there is a failure to accept an offer which proves to have been more favourable, at least in circumstances where the appeal is seen by the Court of Appeal as not having had any great prospect of success. On the other hand, indemnity costs will not necessarily be awarded simply because an offer has been made and rejected which ultimately proves to have been more favourable. There is a good deal to be said for applying the same approach in relation to the costs of an application.
- [18]Another justification for adopting in matters under the UCPR a different attitude in relation to indemnity costs from that expounded in Hayes (supra) is that the UCPR includes rule 5, which requires the rules to be applied with the objective of avoiding undue expense and facilitating the just and expeditious resolution of the real issues in civil proceedings. That end can obviously be assisted by encouraging parties to accept sensible offers of compromise of interlocutory applications.
Conclusion
- [19]In the present case, I do not consider that the approach of the plaintiffs, in seeking to sustain the default judgment, was so unreasonable as to justify an award of indemnity costs. Further, it does not seem to me that there was a clear offer in relation to the application. There is also the consideration that the ground upon which the default judgment was set aside as irregular was not a ground specifically advanced on behalf of the defendant. If the defendant had written saying that the default judgment is irregular for this reason, and inviting the plaintiffs to consent to the default judgment being set aside, including some concession in relation to costs, and that offer had been rejected, and the defendant had then submitted that the judgment was irregular for that reason and should be set aside, and I had agreed with that submission, then I think there would have been a stronger case for indemnity costs. But that is not what happened here.
- [20]The defendant’s submission focused on the issue of whether there was a defence on the merits, and even in relation to that there was a good deal of the defence submission which I did not accept in my reasons. On the whole, I think this is not a case where the behaviour of the plaintiffs and their legal advisers was so unreasonable as to justify an order for indemnity costs. I will accordingly not vary the order that I made on 19 June 2009, which has the effect that costs will be assessed on the standard basis. I will in the circumstances not make any order as to the costs of the argument in relation to indemnity costs.
Footnotes
[1]A “Calderbank” offer is one which is made without prejudice except as to costs.