Flori v Winter[2023] QDC 180

DISTRICT COURT OF QUEENSLAND

1. [1]
   Following judgment for the defendants, the parties were invited to provide submissions as to costs.^[1]  The submissions made on behalf of the defendants seek an order that the court exercise its discretion and order that the plaintiff pay the defendants’ costs, including reserved costs, on an indemnity basis.
2. [2]
   The submissions received on behalf of the plaintiff seek that an order be made for the plaintiff to pay the defendants’ costs on the standard basis, as there is no basis in this proceeding for the court to depart from the general rule that costs are to follow the event.
3. [3]
   Upon consideration of the submissions of both parties, I find it appropriate that the plaintiff pay the defendants’ costs on the standard basis.  I do so for the reasons that follow.
4. [4]
   In accordance with r 681 of the Uniform Civil Procedure Rules 1999 (Qld) costs are to follow the event, subject to the court’s discretion.  Rule 702 stipulates that costs are to be assessed on the standard basis unless the court considers otherwise.   The court may depart from this general rule and exercise its discretion under r 703(1) to assess costs on the indemnity basis.
5. [5]
   The failure of a party to accept a Calderbank offer is one circumstance that may give rise to the court exercising its discretion under s 703(1), provided that the party seeking the indemnity costs can establish that the other party acted “unreasonably and imprudently” in not accepting the offer.^[2]
6. [6]
   Relevantly, the Court of Appeal adopted the following considerations from Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2)^[3] in determining whether a rejection of a Calderbank offer was unreasonable:

   1. “the stage of the proceeding at which the offer was received;
   2. the time allowed to the offeree to consider the offer;
   3. the extent of the compromise offered;
   4. the offeree’s prospects of success, assessed as at the date of the offer;
   5. the clarity with which the terms of the offer were expressed;
   6. whether the offer foreshadowed an application for an indemnity costs in the event the offeree’s rejecting it.”^[4]
7. [7]
   The defendants’ primary submission is that the court should exercise its discretion and award indemnity costs against the plaintiff, as the plaintiff’s failure to accept their Calderbank offer of settlement on 24 September 2020 (‘the Offer’) was unreasonable and imprudent.  This submission by the defendants is supported by three principal arguments. 
8. [8]
   First, the Offer was a “genuine compromise” and not a “token promise”.  It was argued that while the Offer was made on the basis of each party bearing their own costs, the Offer was still a genuine compromise in that the defendants had offered to relinquish their entitlements to their costs thrown away under r 386, which they note would have been substantial as the proceeding had been on foot for over three years.
9. [9]
   Second, the defendants argue that, as demonstrated by the dismissal of the plaintiff’s claim, the claim lacked merit.  The evidentiary issues of the plaintiff’s case should have been apparent at the time of the Offer, and this, they argue, is reinforced by the plaintiff’s filing of the sixth amendment of his statement of claim on 13 April 2022.
10. [10]
    Finally, the defendants argue that the Offer was open for 14 days to the plaintiff, the terms of the Offer were clearly expressed, and the Offer foreshadowed an application for indemnity costs in the event the plaintiff rejected it and the matter proceeded to trial.  These three circumstances are accepted in the plaintiff’s submissions.
11. [11]
    Whilst the plaintiff accepts the final argument put forward by the defendants, three arguments were posited on his behalf as grounds for the ultimate submission, of which I accept, that the plaintiff did not act unreasonably in not accepting the Offer.
12. [12]
    The first argument advanced on the plaintiff’s behalf is that the Offer was made at a late stage of the proceeding.  Relevantly, the progression of the claim was affected by the outcome of an interlocutory application being determined by the Court of Appeal.^[5] The order for the costs for that appeal was made on 29 May 2020 and the Offer was made several months after this.  I am not overly persuaded by this argument, since notwithstanding any effect the Court of Appeal matter may have had on this proceeding, the Offer was made in September 2020, more than two years before the trial was initially set down for December 2022 and actually heard in February and March 2023.
13. [13]
    The plaintiff’s second ground for his submission, of which I do accept, was that the Offer “put forward little in the way of compromise”.  Whilst the consequence of the Offer was that the defendants were relinquishing their right to the costs thrown away under r 386, the other consequence of the ‘walk away’ Offer was that, by accepting it, both parties would be giving up their potential right to costs in the proceedings. Pertinently, at the time the Offer was made, the plaintiff had the right to believe that his claim still had meaningful prospects of success.
14. [14]
    Further on this point, it was contended that the plaintiff was only capable of assessing the strength of his case prospectively.  This is the proper approach.^[6]  Therefore, any retrospective findings of the court at the conclusion of the trial cannot be deemed relevant in the plaintiff’s assessment of the claim’s strengths and weaknesses.
15. [15]
    In the defendants’ brief submissions in reply, all three of the above arguments by the plaintiff were disputed.  Notwithstanding the submission referred to in paragraph [12] above, I reject these contrary submissions by the defendants.
16. [16]
    It has not been sufficiently demonstrated to me by the defendants that the plaintiff acted unreasonably and imprudently in not accepting the Offer made by the defendants on 24 September 2020.
17. [17]
    Therefore, the order is that the plaintiff pay the defendants’ costs on the standard basis.