Ghobrial v Assaf[2014] QDC 191

DISTRICT COURT OF QUEENSLAND

1. [1]
   On 18 June 2014 I ordered the plaintiff to pay the first and second defendants’ costs of action 165 of 2012, not including the costs of the first and second defendants’ application filed 10 January 2014.

2. [2]
   The first and second defendants subsequently made written submissions to the court in an email dated 22 July 2014 concerning appropriate costs orders in this action and in earlier proceedings between the parties in which costs had been reserved.

3. [3]
   The plaintiff and the third and fourth defendants have also provided further written submissions. I propose to make further orders in relation to costs having regard to each party’s written submissions.

Costs of action No. 165 of 2012

4. [4]
   The first and second defendants submit they ought to be entitled to costs on an indemnity basis. The first and second defendants rely on the plaintiff’s rejection of an offer to settle sent by email on 6 August 2013. The offer to settle was on the basis that the plaintiff’s claim was made out of time, and should be abandoned. The offer was on the basis that the plaintiff and first and second defendants walk away and bear their own costs. The first and second defendants have provided no further written submissions on this issue. The plaintiff opposes any costs order on an indemnity basis.

5. [5]
   The court has a general discretion to order costs. In the absence of special circumstances, costs are awarded to a successful party on a standard basis. An order for indemnity costs is exceptional.^[1]  An order for indemnity costs should only be made where the particular facts and circumstances of the case warrant the making of such an order.^[2]  The making and refusing of an offer does not inevitably result in an order for indemnity costs, although it is a relevant consideration. Such orders require some unusual feature to justify them, such that the conduct of the party against whom the order is sought is plainly unreasonable.^[3]

6. [6]
   As I noted in an earlier costs decision, the relevant principles and authorities were considered by the Victorian Court of Appeal in Hazeldenes Chicken Farm Proprietary Limited v Victorian Work Cover Authority (No. 2) [2005] 13 VR 435. In that matter it was said that the critical question is whether the rejection of the offer was unreasonable in the circumstances, bearing in mind the state of the proceeding at which the offer was received, the time allowed to consider the offer, the extent of the compromise offered, the offeree’s prospects of success assessed at the date of the offer, the clarity with which the terms of the offer were expressed, and whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejection of it.^[4]

7. [7]
   In the present case I consider the plaintiff’s rejection of the offer was not unreasonable in the circumstances because the third and fourth defendants were also disputing that the action was limitation barred. The determination of that limitation point was not straightforward and it was reasonable for the proceedings to continue. Also the offer did not specifically foreshadow an application by the first and second defendants for indemnity costs.

8. [8]
   In the circumstances I do not consider it appropriate to order costs on an indemnity basis.

Reserved costs

9. [9]
   The first and second defendants seek cost orders in District Court matters 365 of 2011, No. 494 of 2011 and No. 165 of 2012.

10. [10]
    The third and fourth defendants submit that the first and second defendants have no basis to seek orders for costs at the proceedings numbered 165 of 2012, 365 of 2011 and 494 of 2011 in light of the “lack of submissions made on their behalf”^[5]. The third and fourth defendants have provided no further written submissions as to why reserved costs orders should not be made.

11. [11]
    On the other hand the plaintiff has provided comprehensive written submissions as to what it says are the appropriate costs orders to be made regarding earlier proceedings between the parties where costs were reserved, and which the first and second defendants have specifically claimed in written submissions.

12. [12]
    The plaintiff’s written submissions provide sound grounds for making the orders suggested, and the third and fourth defendants’ brief submissions do not persuade me otherwise. I therefore intend to make orders in line with the plaintiff’s submissions for the reasons stated in those submissions which I now paraphrase as follows:

Costs in proceeding No. 365 of 2011

This was an application for dispensations filed on 18 December 2012 necessitated by the first defendant’s failure to comply with his obligations under Ch 2 of the Personal Injuries Proceedings Act 2002. The plaintiff opposes an order that the second defendant have the costs reserved by the Court on 29 January 2011, on the basis that the application was made because of the first defendant’s own default. It is therefore not appropriate to make a costs order in his favour. I accept the plaintiff’s submission, and make no order as to costs in this matter.

Costs in proceeding No. 494 of 2011

The court reserved costs in an application heard on 8 March 2012. This was an application filed by the third and fourth defendants on behalf of the plaintiff for an order under s 31 of the Limitation of Actions Act 1974 extending the primary limitation period after the third and fourth defendants had allowed it to expire. It is appropriate therefore that the costs of the application be paid on the standard basis by the third and fourth defendants. The second defendant has not established any foundation entitling him to an order for costs on the indemnity basis.

Costs in proceeding No. 165 of 2012: reserved costs on two applications

The plaintiff concedes that reserved costs in matter No. 165 of 2012 should follow the event since the court has not ordered otherwise. Therefore the second defendant is awarded costs reserved by the court on 3 June 2013, and costs reserved by the court on 27 September 2013 on a standard basis. The first and second defendants have not established any foundation entitling them to costs on an indemnity basis.

Sanderson order

13. [13]
    The plaintiff submits that the appropriate costs order is for the third and fourth defendants to pay the first and second defendants costs of all their actions including the plaintiff’s costs of proceedings against the first and second defendants. The plaintiff refers to what is known as a Sanderson order, and submits the court should on this occasion make such an order.^[6]

14. [14]
    The third and fourth defendants have not addressed this issue in any written submissions, and no submissions on this point have been supplied by the first and second defendants.

15. [15]
    In the circumstances I consider such form of order appropriate having regard to the following matters:

• The proceedings against the first and second defendants were initially commenced by the third and fourth defendants on behalf of the plaintiff.

• The third and fourth defendants were responsible for the fact that the first and second defendants have a good defence to the plaintiff’s claim.

• There is nothing to suggest that the plaintiff acted unreasonably by proceeding against both sets of defendants in the one action.

• The third and fourth defendants’ conduct of the proceedings was such as to make it fair to impose liability on them for the first and second defendants’ costs.

Conclusion

16. [16]
    I vacate the costs order made on the 18 June 2014 and make the following orders:

In proceeding No. 165 of 2012

1. Order the third and fourth defendants pay the costs of the first and second defendants of the proceeding, not including the costs of the first and second defendants’ application dismissed by the court on 18 June 2014, on the standard basis.

2. Order the third and fourth defendants pay the plaintiff’s costs of the third and fourth defendants’ application dismissed by the court on 18 June 2014,  on the standard basis.

3. Order the third and fourth defendants pay the costs of the first and second defendants reserved on 3 June 2013, on the standard basis.

4. Order the third and fourth defendants pay the costs of the first and second defendants reserved on 27 September 2013, on the standard basis.

5. In the proceeding No. 365 of 2011 I make no order as to costs.

6. In proceeding No. 494 of 2011 order that the third and fourth defendants pay the costs of the first and second defendants reserved on 8 March 2012, on the standard basis.