Thornton v Lessbrook Pty Ltd (No 2)
[2010] QSC 363
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Thornton v Lessbrook Pty Ltd (No 2)[2010] QSC 363
- Add to List
Thornton v Lessbrook Pty Ltd (No 2)[2010] QSC 363
Thornton v Lessbrook Pty Ltd (No 2)[2010] QSC 363
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO: | |
Trial Division | |
PROCEEDING: | Claim |
ORIGINATING COURT: | |
DELIVERED ON: | 23 September 2010 |
DELIVERED AT: | Brisbane |
HEARING DATE: | Written submissions |
JUDGE: | Applegarth J |
ORDERS: | Existing order as to costs confirmed |
CATCHWORDS: | PROCEDURE – COSTS – INDEMNITY COSTS – where the plaintiff obtained judgment – where the plaintiff had made three offers to settle, none of which complied with the Uniform Civil Procedure Rules 1999 – whether first defendant imprudently refused reasonable offer to compromise – whether the plaintiff should be awarded indemnity costs |
STATUTES: | Uniform Civil Procedure Rules 1999 (Qld) (UCPR) rr 103, 360, 355 |
CASES: | Anderson v AON Risk Services Australia Ltd [2004] QSC 180, cited Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, cited Fick v Groves (No 2) [2010] QSC 182, cited Thiess Pty Ltd v FLSMIDTH Minerals Pty Ltd (No. 2) [2010] QSC 120, cited Todrell Pty Ltd v Finch (No. 2) [2008] 2 Qd R 95, cited |
COUNSEL: | G R Mullins for the plaintiff T W Quinn for the defendant |
SOLICITORS: | Gouldson Legal for the plaintiff Norton White for the defendant |
[1] The plaintiff obtained judgment for the statutory maximum of $500,000, and in my reasons for judgment I indicated that costs should follow the event, with the plaintiff’s costs to be assessed on the standard basis, subject to further submissions on costs.[1] The parties availed themselves of the opportunity to make written submissions. The plaintiff’s original outline of argument filed 27 August 2010 sought an order pursuant to Uniform Civil Procedure Rules 1999 (Qld) (UCPR) 360 that the first defendant pay his costs of and incidental to the proceeding on the indemnity basis. This submission was based upon what was said to be a formal offer to settle made in accordance with the rules on 15 June 2009 for the sum of $300,000 plus costs. The plaintiff advanced further submissions as to why a different order as to costs was not appropriate.
[2] The first defendant’s original costs submissions in response, dated 1 September 2010, contested the plaintiff’s entitlement to an order pursuant to UCPR 360. The basis for the opposition was that UCPR 355(1) requires an offer to specify a period “ending not less than 14 days after the day of service of the offer” during which the offer is open for acceptance. The offer dated 15 June 2009 was stated to be “open for acceptance for the period of fourteen (14) days from the date hereof”. The offer was sent by facsimile after 4.00 pm on 15 June 2009. UCPR 103 deems a document served after 4.00 pm to be served the following day. The offer was expressed to be open for acceptance for 14 days from the date of the offer, rather than 14 days after the day it was served. Although facsimiled on 15 June 2009, it was not served under the rules until 16 June 2009. The consequence is that the minimum 14 day period required by UCPR 355 was not satisfied, and the offer did not comply with the requirements of the rules.
[3] In further submissions dated 7 September 2010 the plaintiff conceded that the offer in question, and two earlier offers, did not comply with the rules. Nevertheless, the plaintiff continued to seek indemnity costs. His new submissions sought an order that the first defendant pay the plaintiff’s costs of and incidental to the proceeding:
(a)on a standard basis until 9 October 2008 (alternatively 15 June 2009); and
(b)thereafter, on an indemnity basis.
Reliance was placed upon three offers, purportedly made in accordance with the rules:
(a)An offer of $400,000 plus costs made on 29 September 2008 (left open for seven days);
(b)An offer of 9 October 2008 in the sum of $400,000 plus costs (left open for 14 days from 29 September 2008 and served, it appears, after 4.00 pm on 9 October 2008);
(c)The offer to settle of $300,000 plus costs made on 15 June 2009 to which I have already referred.
The plaintiff contends that the Court has a broad discretion to award indemnity costs in appropriate circumstances. It cites authorities governing the award of indemnity costs. However, the facts of those cases were materially different to the present case.
[4] The plaintiff submits that the three offers to settle made it abundantly clear that he was willing to settle the action on reasonable terms for a sum significantly less than the amount that he was ultimately awarded by the Court. Reliance is placed upon evidence that he wanted the matter to be finalised for his own peace of mind and that of the deceased’s extended family. The evidence is that the plaintiff was advised that he had a relatively high chance of being awarded more than the offered amounts if he chose to proceed to trial. The plaintiff submits that the first defendant had “good opportunities to settle the claim for a reasonable sum with standard costs over an extended period of time” and that it chose not to take those opportunities. He submits that the first defendant should pay indemnity costs, at the very least, from 15 June 2009 when the third offer to settle was made.
[5] The first defendant submits that the awarding of indemnity costs is exceptional. The rules make provision for costs to be awarded on an indemnity basis where an offer to settle has not been accepted, but such an entitlement only arises in circumstances in which there has been compliance with the requirements contained in the rules. It distinguishes the authorities relied upon by the plaintiff which include cases in which a plaintiff was ordered to pay indemnity costs after pursuing “a hopeless case”. The first defendant questions whether the plaintiff was truly interested in settling the matter for substantially less than a realistic prediction of his probable award of damages by pointing to the fact that the plaintiff and members of the deceased’s family are pursuing separate proceedings in the United States. The first defendant submits that such a course is not readily reconcilable with the contention that he wished to finalise the matter for his own peace of mind and that of the deceased’s extended family. However, the United States proceedings involve different defendants and different issues. I accept that the plaintiff was prepared to settle for a significant reduction in his anticipated award of compensation in order to resolve the matter. However his preparedness to compromise to a significant extent does not necessarily entitle him to an award of indemnity costs.
[6] The principles governing an award of indemnity costs have been considered in a number of cases. In Thiess Pty Ltd v FLSMIDTH Minerals Pty Ltd (No. 2)[2] McMurdo J cited the leading authorities on the circumstances in which an order for indemnity costs may be justified. Some authorities require unreasonable conduct on the part of a litigant. Chesterman J (as his Honour then was) in Todrell Pty Ltd v Finch (No. 2)[3] preferred a criterion of “something irresponsible about the conduct of the losing party which exposed its opponent to costs which should, in fairness, be ordered on the indemnity basis”. As McMurdo J observed in Thiess Pty Ltd,[4] whether the criterion is that of unreasonableness or irresponsibility, there must be something about the facts and circumstances beyond the demerit of a party’s case, as reflected in the outcome, before such an order is warranted.[5]
[7] The judgment of Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd[6] is frequently cited in this context. It is authority for the proposition that the circumstances which may be considered to warrant the exercise of the discretion to award costs on an indemnity basis include:
•the fact that proceedings were commenced or continued in wilful disregard of known facts;
•the making of allegations which ought never to have been made;
•the undue prolongation of a case by groundless contentions;
•evidence of particular misconduct that causes loss of time to the Court and to other parties;
•any imprudent refusal of an offer to compromise.
[8] In Fick v Groves (No 2)[7] I considered some authorities relating to an imprudent refusal of an offer to compromise. In that case I was concerned with an imprudent refusal by a plaintiff to accept a reasonable offer of compromise by a defendant. However, the authorities considered by me in that case have more general application to the circumstances in which an unreasonable refusal of an offer of compromise will be a proper ground for the award of indemnity costs. Those authorities include consideration of the circumstances in which a party has rejected a Calderbank offer. This case does not involve a Calderbank offer in the form of a letter that set out the reasons that explained the formulation of the offer and which foreshadowed an application for an indemnity costs order in the event that the offer was rejected. Nevertheless, the provision of three offers to settle, albeit not complying with the rules, is a factor which I take into account in considering whether the defendant’s failure to accept these informal offers justifies an order for indemnity costs.
[9] In support of his original submissions the plaintiff relied upon an affidavit of his solicitor that exhibited extensive correspondence. This included without prejudice negotiations. The first defendant advanced substantial arguments as to why substantial parts of this material were not admissible, and I find it unnecessary in the circumstances to rule on those objections. I should add, however, that if regard was had to this material one could not ignore the fact that the first defendant participated in good faith negotiations in an attempt to settle the litigation. The first defendant in fact offered to settle the claim for $300,000 plus costs in 2008. However, it required the plaintiff to sign a deed that released not only it but other parties who were apparently unconnected to the litigation. Not surprisingly, this proposal was not accepted by the plaintiff. If it is permissible, as the plaintiff contends, to have regard to the course of negotiations, then this course of negotiations indicates that the first defendant was prepared to compromise. It did not steadfastly refuse to make any sensible offer.
[10] The case was one that involved a number of substantial issues, including assessments of a variety of contingencies. A more realistic assessment by the first defendant of the strength of the plaintiff’s case would have led it to accept the plaintiff’s offer to settle for $300,000 plus costs. However, I am not persuaded that its failure to accept this informal offer in June 2009 was so imprudent as to justify an order for indemnity costs.
[11] The failure of the first defendant to accept what amounted to a 40% reduction of the damages assessed at trial involved a substantial miscalculation of the likely outcome of the trial. The damages assessed by me did not involve acceptance of the plaintiff’s submissions on a number of issues. For example, the assessment would have been higher had I accepted certain authorities upon which the plaintiff relied concerning the impact of the birth of children. Still, the first defendant’s miscalculation was a “mis-calculation in a case with large imponderables.”[8] The failure to accept the plaintiff’s reasonable offer of compromise may have been unreasonable, not only with the benefit of hindsight, but according to what was known at the time. However, I do not consider that it was so unreasonable as to warrant an order for indemnity costs.
[12] Accordingly, I decline the plaintiff’s submission that the order for costs should be varied so as to make provision for indemnity costs after the date of one or other of his informal offers to settle. The order for costs will be in the form pronounced by me upon the delivery of my judgment.
Footnotes
[1] Thornton v Lessbrook Pty Ltd [2010] QSC 308.
[2] [2010] QSC 120.
[3] [2008] 2 Qd R 95 at 96 [4].
[4] Supra at [4].
[5] See also Anderson v AON Risk Services Australia Ltd [2004] QSC 180 at [2].
[6] (1993) 46 FCR 225.
[7] [2010] QSC 182 at [28] – [36].
[8] Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 725.