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Thomson v Thomsons Lawyers (No 2) QDC 151
DISTRICT COURT OF QUEENSLAND
Thomson v Thomsons Lawyers (No 2)  QDC 151
THOMSONS LAWYERS (A FIRM)
Magistrate Court at Brisbane
2 June 2016 (ex tempore)
2 June 2016
Horneman-Wren SC DCJ
PROCEDURE- CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS- COSTS- GENERAL MATTERS- where request for costs order pursuant to UCPR 743G(2)(d)(i)- where costs order made
PROCEDURE- CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS- COSTS- INDEMNITY COSTS- RELEVANT CONSIDERATIONS GENERALLY- where order sought for indemnity costs for the Magistrates Court proceedings- whether demonstrated that conduct is plainly unreasonable or that there is special or unusual feature justifying a departure from the usual rule of costs on the standard basis- whether proceedings where commenced for some ulterior motive or in wilful disregard of known facts or law- whether allegations made that ought never have been made- where allegation at issue was determined on appeal and not by acting magistrate- where contention addressed in substantive judgment- where no order for indemnity costs should be made
PROCEDURE- CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS- COSTS- OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENS- INFORMAL OFFERS AND CALDERBANK LETTERS- whether correspondence amounts to an invitation to capitulate- whether failure to accept is unreasonable- whether time given to consider offer is reasonable- where not unreasonable to reject offer
PL Somers for the first appellant.
R Dickson for the respondent.
McBride Legal for the first appellant.
Thomson Geer Lawyers for the respondent.
HIS HONOUR: On 8 April 2016, I published a judgment in respect to the substantive appeals in this matter, in which I ordered that the appeals be allowed; that the appeals be allowed and that the judgment entered on 22 August 2014, against Carolyn Thomson and Wayne Thomson, be set aside. I also ordered that I would hear the parties as to costs and whether any further order ought be made.
I ordered that I would hear the parties as to whether any further order ought be made, in light of having made findings in the judgment that Mr and Mrs Thomson were not, and at no time had been, liable for the legal costs of the respondent firm. The parties have placed before me an agreed form of order, in respect of that matter, in the following terms: The question pursuant to UCPR 743G(2)(d)(i) be answered that the first appellant is not liable to pay the respondent any sum for costs, as she was not a client. I will make an order in those terms.
The parties have also made detailed submissions in relation to costs. The appellant’s submissions, in short, are that she should have her costs, of and incidental to the appeals, on an indemnity basis. The appellant also seeks the costs of the Magistrates Court proceedings below, on an indemnity basis.
For the respondents, the position is, effectively, that the appellant should have her costs, of an incidental to the appeals, on the standard basis, except for certain costs thrown away as a consequence of amendments made to the notice of appeal in appeal number 149 of 2014 and the costs of the appellant’s application to extend the time within which to bring the appeal from Magistrate Hall’s orders, of 18March 2014. The respondent contends that there ought be no order as to costs in respect of the proceedings in the Magistrates Court in respect of either the hearing before Magistrate Hall or the hearing before Magistrate Costello, on 22 August 2014.
Separately, the respondent has made an application for an indemnity certificate, under the Appeal Costs Fund Act 1973, in respect of the appeal in this court against the order of Magistrate Costello, of 22 August 2014.
The test for awarding indemnity costs was recently considered by his Honour Justice Burns in 2040 Logan Road Pty Ltd v Body Corporate for Paddington Mews CTS 39149 (No 2)  QSC 065 where, at paragraph 4, his Honour said:
However, such an award will only be appropriate where it is positively demonstrated that the conduct of the party against whom the order is sought is plainly unreasonable or that there is some special or unusual feature of the case that justifies a departure from the usual rule that the costs of a successful party are to be calculated on the standard basis. When considering such questions reference is often made to the variety of circumstances set out in the judgment of Shepherd J in Colgate-Palmolive Company & Anor v Cussons Pty Ltd or in subsequent decisions that have followed a similar approach. Although the several circumstances highlighted in these cases to warrant an order for indemnity costs were not intended to cover the field, they supply useful guidance, thus where:
(a)allegations of fraud are made, knowing them to be false or irrelevant;
(b)evidence of particular misconduct causes the loss of time to the court and the other parties;
(c)the proceeding was commenced for some ulterior motive;(d)the proceeding was commenced in wilful disregard of known facts or clearly established law;
(e) allegations are made that ought never have been made; (f) the case is unduly prolonged because of groundless contentions;
(g)the losing party, properly advised, should have known there was no chance of success;
(h)the court’s processes have been abused, in the sense that the court’s time and the litigant’s money has been wasted on a frivolous or unjustified proceeding; or
(i)there has been an imprudent refusal of an offer to compromise.
The court may conclude in favour of an award of costs assessed on an indemnity basis. Of course, in all cases costs are in the discretion of the trial judge and the mere presence of one or more of these recognised circumstances do not give rise to an automatic entitlement to indemnity costs. All of the circumstances of the case must be considered to determine whether such an order should be made and it would be wrong, in principle, to focus solely on the conduct of the case by the losing party.
In relation to offers of compromise, his Honour went on to say, at paragraph 5:
Where an offer to compromise proceeding in terms more favourable than the eventual outcome has been made and refused, the following statement of principle from the Court of Appeal, in J & D Rigging Pty Ltd v Agripower Australia Limited & Ors, will be apposite:
“The failure to except Calderbank offer is a matter to which a court should have regard when considering whether to order indemnity costs. The refusal of an offer to compromise does not warrant the exercise of the discretion to award indemnity costs. The critical question is whether the rejection of the offer was unreasonable in the circumstances. The parties seeking costs on an indemnity basis must show that the party acted, ‘Unreasonably or imprudently’, in not accepting the Calderbank offer”.
In considering whether the rejection of a Calderbank offer was unreasonable or imprudent, the court should, ordinarily, have regard to the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offerees prospects of success, assessed as at the date of the offer; the clarity with which the terms of the offer were expressed and whether an application for indemnity costs was foreshadowed, in the event that the offeree rejected the offer.
Those six criteria to be considered in assessing whether the rejection of a Calderbank offer was unreasonable or imprudent were drawn from Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 and were referred to by the Court of Appeal in Hadgelias Holdings Pty Ltd v Seirlis  QCA 325 at . There Holmes JA, as her Honour then was, and with whom Gotterson and Morrison JJA agreed, said that the Court of Appeal’s approach has been to award costs on a standard basis, unless the conduct of the party against whom indemnity costs sought was plainly unreasonable. Her Honour also referred, at paragraph 12, to the then recent case of Stewart v Atco Controls Pty Ltd  88 ALJR 811, wherein the High Court had observed:
The non-acceptance of a Calderbank offer is a factor, in some cases a strong factor, to be taken into account on an application for indemnity costs. The respondent submits that its rejection of the offer was not unreasonable. If that be the test, it would appear to require, at the least, that the respondent point to a reason for not accepting the offer beyond the usual prospects of being successful in litigation.
Of the list of matters set out in 240 Logan Road Proprietary Limited, the appellants here identify the matters in paragraphs (c), (d) and (e) as being those most relevant for consideration here, that is that the proceedings were commenced for some ulterior motive or in wilful disregard of known facts or clearly established law and in which allegations were made that ought never have been made. The allegation which is said ought never have been made were that the then appellants, Mr and Mrs Thomson, were clients of the respondent firm and liable to pay the fees and charges of Kadoe Proprietary Limited. The appellants contend that those allegations were made in wilful disregard of known facts and clearly established law. It contends that in the event the allegation that the appellants were clients of the respondent firm and liable to pay their costs was, “Found to be baseless”.
In assessing whether costs ought be ordered on an indemnity basis, in light of those matters, it is, in my view, important to recall that central to the appeals against the orders of the two magistrates was the appellant’s contention that the question of whether or not she was a client of the firm, and liable to its costs, was never determined by either magistrate. That issue was determined by this court in the appeal proceedings, because each of the parties urged the court to take that course, rather than remitting the matter to the Magistrates Court for that issue to be determined.
In my view, those issues having been resolved against the respondent does not result in a conclusion that the proceedings in the Magistrates Court were commenced for some ulterior motive or in wilful disregard of known facts or clearly established law. In my view, the respondent firm commenced the proceedings motivated by a desire
to have its costs paid by persons who it believed were liable for them. That it was ultimately established that Mrs Thomson and Mr Thomson were not clients and not liable for the costs, could not be said, in my view, and given the reasons in the substantive judgment, to have been a known fact or a matter of clearly established law.
In the submissions on behalf of Mrs Thomson, it is contended that the proceedings were commenced in the Magistrates Court, continued there and this appeal opposed for the ulterior motive of the firm attempting to pressure the appellants into paying costs for which they were not liable. I would not associate an ulterior motive such as that to the respondent firm. Rather, as I have said, I would associate with them a desire to enforce costs against parties in circumstances in which they believed they were entitled. I would not award indemnity costs on that basis.
The second basis upon which the appellants seeks indemnity costs is that in two pieces of correspondence it made offers for the resolution of the appeals. The first was contained in the letter from the solicitors for the appellant, dated 23 March 2015. It followed shortly after reasons in interlocutory proceedings, before his Honour Judge Reid, were delivered, on 17 March 2015. The appellant’s solicitors referred extensively to findings made by his Honour and asserted from those findings that it was clear that the appellants had strong prospects of success in the appeals. It proposed resolution on the basis that the appeals be allowed and that the judgment, which had been entered by Magistrate Costello, on 22August 2014, be buried such that Mr and Mrs Thomson were not liable for the firm’s invoices and that the firm paid the appellant’s costs of the appeal on the standard basis, to be agreed or assessed.
Mr Dickson, for the respondent firm, submits that that was really no offer to compromise at all, rather it was an invitation for the respondent firm to capitulate in the proceedings: See Megatop Cargo Pty Ltd v Money Tek Services Pty Ltd  NSWCA 3 at paragraph5, citing Taheri v Vitek (No 2)  NSWCA 344 at paragraphs 9 to 11 and Copping Refuse Disposal Site Joint Authority v Southern Beaches Conservation Society Inc  TASSC 5 at paragraph 9.
In my view, that letter of 23 March 2015 did effectively invite capitulation. However, I would not consider the respondent firm’s failure to accept that offer as being unreasonable or imprudent, being the relevant test, because his Honour Judge Reid had made observations in his interlocutory decision about aspects of the respondent’s case, those observations related particularly to the absence of signed costs agreements between the respondent firm and Mr and Mrs Thomson.
In the event the question of whether or not Mr and Mrs Thomson were liable either under those agreements or by virtue of a relationship of solicitor and client extended beyond the issue as to whether there were signed costs agreements. An issue determined on the appeal was whether those agreements had been accepted by conduct, irrespective of the absence of the execution. In those circumstances, I do not consider the rejection of the offer at that time to be unreasonable.
The second offer was contained in correspondence emailed at 6.24 pm on 25 November 2015. That was the evening before the first day of the appeal. It was said to be an offer open for acceptance until 10 am on 26 November 2015. That is the first day of the appeal. That offer did contain an element of compromise. It, in fact, included an offer that judgment be entered against Mr and Mrs Thomson in the sum of $2744, being the amount of costs billed by the respondent firm for work performed after 11 July 2013, being the date upon which the substitute costs agreements had been proffered.
It can be seen from the dates to which I have referred that that offer was proffered at a very late stage of the proceedings. It also allowed the offeree, the respondent firm, very little time to consider the offer. The correspondence, or the letter, also set out the appellant’s analysis of the strength of the respondent’s case for there being retainer agreements with Mr and Mrs Thomson or that Mr and Mrs Thomson were otherwise liable for the costs as clients. In the event that analysis aligned closely with the findings ultimately made by this Court on the appeals. However, I do not consider a failure to accept that offer, made only after close of business the day before the appeal commenced, to be unreasonable or imprudent. It appears that little of the analysis set out in that letter could not have been provided at a much earlier stage.
In the course of the costs hearing Mr Somers suggested that most of it might in fact have been known shortly after the time of Judge Reid’s decision in March 2015. Mr Macgillivray in an affidavit filed by leave in the costs proceedings does identify a reason for not accepting the offer. Having referred to the email containing the offer having been received at 6.24 pm on 25 November 2015 after the close of the respondent’s firm for that day he said it was too late, having regard to his preoccupation with preparation for the appeal, including but not being limited to urgently assisting counsel in the compilation of authorities in relation to an application that was to be made at the start of the appeal.
For these reasons, I would refuse the appellant’s application for indemnity costs.
As for the respondent’s opposition to costs being awarded in respect of that part of the appeal proceedings which were occupied by the application for an extension of time in which to bring one of the appeals, that opposition is, in my respectful view, misplaced. Whilst rule 695 of the UCPR provides that a party applying for an extension or shortening of time set out in the Rules must pay the costs of the application, that is subject to the Court considering another order appropriate or that is subject to the Court making some other order.
Here, the application for an extension of time was heard at the commencement of the appeal, not some time well before the hearing of the appeal hearing. It occupied in excess of the first day. In the course of the proceedings, the concession was made that the issues which would need to be resolved in the appeal which required an extension of time would also need to be resolved in the appeal against the orders of Magistrate Costello, in respect of which no extension of time was required, the appeals having been brought within time.
Mr and Mrs Thomson were cross-examined in the course of the application for an extension of time hearing and the transcript of their evidence on the application was tendered in the appeal proper.
In my view, no dissection of the proceedings should be made for the purposes of separating the application for an extension of time from the appeal proper in terms of a costs order in respect of the appeal.
The respondent’s opposition to the costs associated with the application to amend the notice of appeal which form part of an order of Judge Reid reserving costs is not misplaced.
The amendments which were made pursuant to that application were substantial. It would have been inevitable that significant costs would have been thrown away as a consequence of the amendments made. Apart from that matter, however, I am of the view that the appellant should have the costs reserved by Judge Reid.
A substantial part of the proceedings before his Honour was in respect of an application to stay an enforcement warrant which had been issued and an enforcement order that had been made by Magistrate Costello. There was also the respondent’s application for security for costs of the appeal, which his Honour refused. In my view, the reserve costs relating to those matters should be the appellant’s. His Honour had already separately dealt with the costs of the respondent, thrown away by reason of the first appellant having been included as an appellant and the application to remove that party.
As far as the proceedings below are concerned, the matter before Magistrate Hall can be dealt with briefly. The appellant, who was one of the respondents in that proceedings, appeared for herself. There should be no order as to costs on that occasion. In respect of the proceedings before Magistrate Costello, the respondents were represented by a solicitor, albeit one who only had been recently instructed and who was in a position only to make an application to adjourn the application or to adjourn the hearing, which application was unsuccessful.
It was on that occasion that his Honour entered judgment and the circumstances in which he did so are set out at paragraphs 55 to 82 of the substantive judgment. The foreshadowed application for an adjournment of that hearing was rejected by Mr Macgillivray of the respondent firm at 4 pm on the day before the hearing for reasons including that the issue concerning whether Mr and Mrs Thomson should be removed from the proceedings had been determined against the appellants at the hearing before Magistrate Hall on the 8th of March 2014. For reasons that I have set out in the substantive judgment, that was incorrect. In those circumstances it was appropriate for the appellants to engage solicitors to appear on their behalf at the hearing and in my view, they should have their costs of – the appellant should have her costs of that hearing, albeit that they may be limited, given the involvement of the solicitor. That the order of Acting Magistrate Finger made on 19 September 2014 in the Magistrates Court proceeding be set aside. That order should be refused. There was no appeal brought from the order made by his Honour, the Acting Magistrate. From what I have been told in this hearing, it sought relief, which
simply was not available to be granted in the Magistrates Court. Therefore, the costs order which was made in favour of the respondent firm in those proceedings ought not be upset by any order in these proceedings. So the further orders I will make are that:
- (1)the question pursuant to UCPR 743G(2)(d)(i) be answered that the first appellant is not liable to pay the respondent any sum for costs as she was not a client
- (2)the respondent is to pay the appellant’s costs of an incidental to the hearing in the Magistrates Court before Magistrate Costello on 22 August 2014 on standard basis.
- (3)the respondent is to pay the appellant’s costs of and incidental to the appeals, including the application to extend time on a standard basis.
- (4)the respondent is to pay the appellant’s costs of the proceedings before his Honour Judge Reid on a standard basis.
- (5)the appellant is to pay the respondent’s costs thrown away by the amendment of the notice of appeal allowed by his Honour Judge Reid on a standard basis.
In respect of the respondent’s application for an indemnity certificate concerning the proceedings before Magistrate Costello on the 22nd of August 2014 that application should be refused. It was made on the basis that the appellant was simply acting upon the basis that the costs certificate acted effectively as a judgment and in that regard sought to rely upon the decision of his Honour Judge McGill in – Cartwright v Rapp Law, Brisbane District Court 4166 of 2012. In my view there was more to the proceedings before Magistrate Costello than that. For the reasons set out in the substantive reasons at paragraph 74, his Honour proceeded on the misunderstanding that the issue concerning respondency to the costs application which Mrs Thomson had sought to raise in the proceedings before Magistrate Hall on 18 March 2014 had been dealt with on its merits. That was not the case, as I noted in the substantive reasons at paragraph , in delivering his reasons ex tempore in respect of that matter and no attempt was made to correct his Honour’s apparent misunderstanding that the application for an order for a costs assessment had been resisted by affidavit material.
For those reasons the application for an indemnity certificate is refused.
- Published Case Name:
Thomson v Thomsons Lawyers (No 2)
- Shortened Case Name:
Thomson v Thomsons Lawyers (No 2)
 QDC 151
02 Jun 2016
|Event||Citation or File||Date||Notes|
|Primary Judgment||Magistrates Court (No Citation)||22 Aug 2014||Judgment in favour of Thomsons Lawyers against Carolyn Thomson and Wayne Thomson in the sum of $72,810.75 (an assessment of costs).|
|Primary Judgment|| QDC 78||08 Apr 2016||Appeals allowed; judgment entered on 22 August 2014 against Carolyn Thomson and Wayne Thomson set aside: Horneman-Wren SC DCJ.|
|Primary Judgment|| QDC 151||02 Jun 2016||Costs judgment: Horneman-Wren SC DCJ.|
|Notice of Appeal Filed||File Number: Appeal 4535/16||06 May 2017||-|
|Appeal Discontinued (QCA)||File Number: Appeal 4535/16||11 Aug 2016||Appeal dismissed by consent.|