Rook v Crofts (No. 2)[2018] QDC 238

DISTRICT COURT OF QUEENSLAND

1. [1]
   In this matter I gave judgment on 12 September this year that the Second Defendant pay the Plaintiff $593,441, including $4,654 by way of interest. By the time of trial, liability was no longer in issue, and I was required only to assess damages. At the trial, the submissions of the parties were a long way apart. The plaintiff submitted that damages should be assessed at a total of $812,629.62, while the second defendant submitted that they should be assessed at a total of $9,580, allowing nothing for economic loss or gratuitous care. Unsurprisingly, my assessment was somewhere in between.

2. [2]
   The parties had each made mandatory final offers prior to the commencement of the proceeding, as required by the Motor Accident Insurance Act 1994 (“the Act”). The judgment amount was well in excess of both of them. It follows that there are no relevant restrictions under the Act on the awarding of costs. Nevertheless, the provisions of the Act remain relevant in two respects. First, I am required by the Act to have regard to the mandatory final offers in deciding the question of costs.^[1]  Second, one of the purposes of the Act is to “encourage the speedy resolution of personal injury claims resulting from motor vehicle accidents”: s 3(e).  It is therefore appropriate for a court making a costs order in a matter which does proceed to trial to seek by that order to further that objective.

3. [3]
   Such an approach can also be seen to lie behind the provisions of UCPR r 360, which encourages early settlement of claims by providing, not just for costs on the indemnity basis where it applies, but for costs on that basis of the entire proceeding.^[2]  That rule gives a discretion to make another order for costs if one is appropriate, but the starting point is that costs on the indemnity basis applies to the whole proceeding, and the onus is on the defendant to show that another order is appropriate.^[3]  That is the position contended for by the plaintiff, who relies on an offer to settle under the rules, delivered on 13 February 2017, for $200,000 plus costs. On the other hand, the second defendant seeks to limit indemnity costs to those incurred after 27 February 2017, with standard costs prior to that.^[4]  

4. [4]
   One area where it is accepted that another order may be appropriate is if the plaintiff’s case, or evidence available to support the case, changes materially after the time for accepting the offer expires.^[5]  In this respect, the defendant relied on the proposition that, after the first offer under the rules, the plaintiff had obtained a medical report from Dr Maguire, which was disclosed in February 2017, and relied on, and accepted, at the trial. It is true that this was after the plaintiff’s first offer to settle under the rules, but the plaintiff had previously disclosed reports by Dr Pentis, another orthopaedic surgeon, dated 28 May 2015 and 14 October 2015. The latter report came to a conclusion much like that of Dr Maguire in his first report. The reports of Dr Pentis were included in the bundle of the plaintiff’s medical reports at the trial, but were ultimately not relied on because the opinion of Dr Pentis was said merely to duplicate the opinion of Dr Maguire.^[6]  Although there were differences in detail, in terms of the broad consequences of the accident, and in particular the effect on the employability of the plaintiff, the two reports were to much the same effect.

5. [5]
   It follows that, although the plaintiff secured a report by a different orthopod after the first offer under the rules, there was no substantial change to his case as a result. The major conflict in the medical evidence, between Dr Fraser and the plaintiff’s orthopaedic surgeon, already existed and remained.

6. [6]
   What did emerge after the first formal offer under the rules was a report from a psychiatrist, Dr Caniato. At the compulsory conference the plaintiff had alleged some psychological sequelae of the accident, but this was then unsupported by medical evidence. Nevertheless, this would not have come as a complete surprise to the defendant. This prompted the second defendant to obtain a report from another psychiatrist, which produced a further conflict of medical evidence. For reasons given earlier, both of these conflicts were resolved at the trial in favour of the plaintiff. There was however another offer to settle under the rules by the plaintiff on 21 August 2017, after the report of Dr Caniato was made available, and not accepted.^[7]  If the relevant offers had been closer to the judgment amount, the additional significance of the psychological consequences of the accident on the plaintiff may have been a matter of some importance; but in this case the judgment sum was so much greater than the formal offers to settle that it can confidently be said that the offers would have been exceeded even if the psychological consequences of the accident had been ignored.

7. [7]
   Overall, I am not persuaded that the defendant has shown that another order for costs is appropriate in the circumstances, and the prima facie position under r 360 applies. In those circumstances, it is not necessary for me to consider whether the same result can be reached by reference to the failure to accept the mandatory final offer under the Act. There is some authority to support the view that a mandatory final offer can be treated as the equivalent of a Calderbank offer, and in that way support an order for costs on the indemnity basis apart from any offer under the rules.^[8]  That would depend on whether it was unreasonable or imprudent not to have accepted it, in the light of the circumstances known to the defendant at the time.

8. [8]
   It is however relevant for me to have regard to these offers; indeed I am required by the Act to do so. What they suggest to me is that at that stage the plaintiff was willing to compromise his claim significantly (in comparison to his true entitlement, as found) in order to achieve an early settlement of his claim, but the defendant was proceeding on the basis that, if the matter went to trial, the opinion of Dr Fraser would be accepted. That is, the offer was based on the assumption that it was likely to succeed on the resolution of the conflict of medical evidence if the mater went to trial. That in my opinion was an unrealistic position for the defendant to have taken, both then and subsequently; it should have negotiated on the basis that either medical opinion might have been accepted. That was not consistent with the object of the Act, discussed earlier.

9. [9]
   Further, at that stage the defendant had not admitted liability. It is of course possible that the defendant had evidence to support its position on liability which I did not hear because liability was ultimately admitted, but, bearing in mind what I did hear about the circumstances of the accident, I consider that I should proceed on the basis that the ultimate acceptance of liability means that it should always have been accepted. That supports an outcome where the costs associated with the plaintiff’s case on liability are paid on the indemnity basis.

10. [10]
    It follows that having regard to the mandatory final offers tends to support an order for costs on the indemnity basis, rather than the opposite. I therefore order that the second defendant pay the plaintiff’s costs of the proceeding assessed on the indemnity basis.