Stitz v Manpower Services Australia Pty Ltd (No 2)
[2011] QSC 286
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- Unreported Judgment
- Stitz v Manpower Services Australia Pty Ltd (No 2)[2011] QSC 286
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Stitz v Manpower Services Australia Pty Ltd (No 2)[2011] QSC 286
Stitz v Manpower Services Australia Pty Ltd (No 2)[2011] QSC 286
SUPREME COURT OF QUEENSLAND
PARTIES: | JOHN CHARLES STITZ |
FILE NO/S: | |
Trial Division | |
PROCEEDING: | Trial |
ORIGINATING COURT: | |
DELIVERED ON: | 23 September 2011 |
DELIVERED AT: | Rockhampton |
HEARING DATE: | On the Papers |
JUDGE: | McMeekin J |
ORDERS: | 1.The plaintiff pay the costs of the second defendant on the standard basis up and until 18 August 2009. 2.The plaintiff pay the costs of the second defendant on the indemnity basis after 18 August 2009. |
CATCHWORDS | PROCEDURE - SUPREME COURT PROCEDURE - COSTS - where uniform civil procedure rules do not apply – where plaintiff was unsuccessful at trial - where defendant seeks indemnity costs - whether plaintiff imprudent in their refusal of offers of compromise Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 316 Uniform Civil Procedure Rules 1999 (Qld), r 361, r 681 Calderbank v Calderbank [1975] 3 All ER 333 Colgate-Palmolive Company& Anor v Cussons Pty Ltd (1993) 118 ALR 248 Emanuel Management Pty Ltd (in liq) v Fosters Brewing Group Ltd & Ors [2003] QSC 299 Latoudis v Casey (1990) 170 CLR 534 Lawes v Nominal Defendant [2007] QSC 103 Rosniak v Government Insurance Office (1997) 41 NSWLR 608 Sheridan v Warrina Community Co-Operative Ltd [2005] 1 Qd R 187 Todrell Pty Ltd v Finch & Ors [2007] QSC 386 |
COUNSEL: | G Cross for the plaintiff RAI Myers for the defendants |
SOLICITORS: | Smiths Lawyers for the plaintiff Spark Helmore for the defendants |
[1] McMEEKIN J: On 9 September 2011 I gave judgment in favour of the defendants in these proceedings.[1] I adjourned the question of the appropriate costs orders to allow the parties the chance to make written submissions which I have now received.
[2] In the proceedings the plaintiff claimed damages for negligence, breach of contract, and breach of statutory duty against his employer (the first defendant) and host employer (the second defendant). The second defendant seeks that its costs be paid and on the indemnity basis. The plaintiff submits that there should be no order as to costs.
[3] It is common ground that I have no jurisdiction to award costs in favour of a successful employer (ie the first defendant) against a losing plaintiff in proceedings governed by the Workers’ Compensation and Rehabilitation Act 2003 (“WCRA”) as these are: see s 316 WCRA and Sheridan v Warrina Community Co-Operative Ltd [2005] 1 Qd R 187.
[4] The plaintiff’s written submission asserts first that s 316(1) WCRA “prohibits costs orders being made other than pursuant to s 316 WCRA” and secondly, that “where the plaintiff’s claim is dismissed no costs order against the plaintiff can be made”. No other explanation or argument is offered. While not expressed the submission seems to be that s 316 WCRA takes away the Courts’ power to award costs in favour of a successful non employer. No authority is cited for the proposition, if that is what is intended.
[5] Section 316[2] provides:
“316 Principles about orders as to costs
(1)No order about costs, other than an order allowed under this section, is to be made by the court in the claimant’s proceeding.
(2)If a claimant or an insurer makes a written final offer of settlement that is refused and the court later awards damages to the worker, the court must, in the following circumstances, make the order about costs provided for—
(a)if the amount of damages awarded is equal to or more than the worker’s written final offer—an order that the insurer pay the worker’s costs on the standard basis from the day of the written final offer;
(b)if the amount of damages awarded is equal to or less than the insurer’s written final offer—an order that the worker pay the insurer’s costs on the standard basis from the day of the final offer.
(3)If the award of damages is less than the claimant’s written final offer but more than the insurer’s written final offer, each party bears the party’s own costs.
(4)An order about costs for an interlocutory application may be made only if the court is satisfied that the application has been brought because of unreasonable delay by 1 of the parties.
(5)If an entity other than the worker’s employer or the insurer is joined as a defendant in the proceeding, the court may make an order about costs in favour of, or against, the entity according to the proportion of liability of the defendants and the justice of the case.
(6)The court may make an order for costs against the worker’s employer or the insurer under subsection (5) only if—
(a)the order is in favour of the entity; and
(b)the worker’s employer or the insurer joined the entity as a defendant.”
[6] For the purpose of the argument it may be accepted that the word “proceeding” in s 316(1) is to be read as extending beyond the proceeding between the employer and the worker and is to encompass the proceeding between the plaintiff and a non employer. At least that seems to be so where there is the one proceeding. Hence I assume that unless the order requested by the second defendant is allowed by the terms of s 316 then the power to award costs to a successful litigant has been taken away.
[7] The difficulty with the plaintiff’s submission however is subsection (5). Here an entity “other than the worker’s employer or the insurer” has been joined as a defendant in the claimant’s proceeding. In those circumstances “the court may make an order about costs in favour of … the entity according to the proportion of liability of the defendants and the justice of the case”.
[8] Subsection (5) makes no mention of the entity against whom a costs order might be made – presumably orders against either or both the plaintiff and a co-defendant are in contemplation. There is nothing in the text of the legislation to indicate a contrary intention. The limitation on the width of the discretion – “according to the proportion of liability of the defendants and the justice of the case” – does not seem to me to require any new approach to the question of the proper order to make where a defendant is wholly successful. In Latoudis v Casey[3] Dawson J observed in relation to the discretion to award costs after the introduction of the Judicature Acts in England:
“Whilst the discretion was absolute and unfettered, it was to be exercised judicially, that is to say, not by reference to irrelevant or extraneous considerations, but upon facts connected with or leading up to the litigation.”[4]
[9] Costs ordinarily follow the event unless the court considers another order more appropriate: rule 681 Uniform Civil Procedure Rules 1999 (“UCPR”). Such an order normally reflects the “justice of the case”. Where there is a finding that a defendant should bear no liability for the damages claimed then an order about costs in its favour would seem an appropriate exercise of the discretion granted by s 316(5). Thus I see no reason why costs on the usual basis should not be awarded to the second defendant.
[10] The second defendant, however, has sought that its costs be paid on the indemnity basis instead of the usual standard basis. The basis for the submission is that several offers were made to the plaintiff by the second defendant which involved payment of damages to the plaintiff. Those offers were:
(a) 4 August 2009 - $100,000 plus costs
(b) 2 December 2009 - $170,000 plus costs
(c) 20 April 2011 - $180,000 plus costs
[11] The first two offers I have referred to were made pursuant to Chapter 9 Part 5 of the UCPR. The final offer, made shortly before the commencement of the trial (which commenced 4th May 2011), was expressed to be open until 4pm the following day and mention was made of reliance on the principles in Calderbank v Calderbank [1975] 3 All ER 333.
[12] The costs regime following successful offers set out in the UCPR has no application where a plaintiff fails to succeed to a judgment at all. That is so because the relevant rule (r 361) is predicated on the assumption that “the plaintiff obtains a judgment” (see r 361(1)(a)).[5] In these circumstances the rules give no prima facie entitlement to the defendant as to any particular order or give other guidance as to the proper approach where offers have been made as here, save the general rule in r 681:
“681 General rule about costs
(1)Costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court considers another order is more appropriate.
(2)Subrule (1) applies unless these rules otherwise provide.”
[13] Plainly the discretion to award indemnity costs is preserved. I turn then to the principles that apply to the awarding of indemnity costs.
[14] It has been said that indemnity costs orders may be appropriate where proceedings are commenced or continued for some ulterior motive, or in wilful disregard of known facts, or clearly established law or where there has been an imprudent refusal of an offer of compromise: Colgate-Palmolive Company& Anor v Cussons Pty Ltd (1993) 118 ALR 248 at 249; 46 FCR 225 per Sheppard J. In Rosniak v Government Insurance Office (1997) 41 NSWLR 608 the New South Wales Court of Appeal indicated that the court required some evidence of “unreasonable conduct”.
[15] Chesterman J (as he then was) in Todrell Pty Ltd v Finch & Ors [2007] QSC 386 at [4] expressed his view of these authorities:
“The defendants in Action 1308 of 2007... seek their costs of the trial which lasted four days on the indemnity basis. They do so on reliance upon the authorities which establish that, other things being equal, commencing proceedings in wilful disregard of clear law will result in an order for costs on the indemnity basis. The authorities include Colgate Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 and Di Carlo Dubois [2002] QCA 225. Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616 decided that it was not necessary for a party seeking indemnity costs to establish ethical or moral delinquency by its opponent. It was enough that the opponent conducted itself unreasonably in some way. In Emanuel Management Pty Ltd (in liq) v Fosters Brewing Group Ltd & Ors [2003] QSC 299 I pointed out that that test is inexact. The test which I myself adopted in that case, and others, was whether there was something irresponsible about the conduct of the losing party which exposed its opponent to costs but should, in fairness, be ordered on the indemnity basis. It is, of course, irresponsible to commence proceedings which cannot succeed because of a known legal impediment.”
[16] In my view the continuing of proceedings where there are disputed issues of fact does not necessarily display the degree of “irresponsibility” that Chesterman J spoke of.
[17] In Emanuel Management Pty Ltd (in liq) v Fosters Brewing Group Ltd & Ors [2003] QSC 299 Chesterman J discussed the proper approach to this situation, that is where the rules do not apply but where an offer to compromise has been made by the defendant giving the plaintiff something:
“[38] I was referred to a debate in the authorities as to what response is appropriate where a successful defendant had offered to compromise on terms which gave the plaintiff something and the offer was rejected. There are slightly conflicting views: on the one hand there is said to be a ‘presumption’ that the defendant should have its costs on the indemnity basis and the plaintiff must show some good reason why another order should be made. The second view is that the defendant must show that the offer was rejected unreasonably, judged in the circumstances known at the time it was made.
[39] An order of costs being a matter always for the discretion of the court I do not know that it is sensible to adopt either position as a ‘rule’. The making of an offer in the circumstances in question is a very relevant circumstance to be taken into account when exercising the discretion. If there are no countervailing circumstances the order for indemnity costs is likely to be made.”
[18] In Lawes v Nominal Defendant [2007] QSC 103 Byrne J said of a mandatory final offer made under the Motor Accident Insurance Act regime that the principles applicable to a Calderbank offer were analogous and he summarised those principles as follows:
“…the mere fact that the party making the offer obtains a judgment more favourable than the terms offered does not of itself inevitably demonstrate such special circumstances as would justify a departure from the ordinary basis of a costs assessment: See Crump v Equine Nutrition Systems (No 2) [2007] NSWSC 25 at [39]-[41]; Gove v. Black [2006] WASC 298 at [43]-[47]; Balderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited [2006] NSWSC 583 at [30]-[37]; Fordyce v Fordham (No 2) [2006] NSWCA 362 at [16], [21]; Devprov v Seamark Pty Ltd [2007] QSC 31 at [4]; Westpac Banking Corporation v Commissioner of State Revenue [2004] 55 ATR 72 [2004] QSC 19 at [30]-[32]; Gretton v The Commonwealth of Australia [2007] NSWSC 149 at [11]-[17]; Food Improvers Pty Limited v BGR Corporation Pty Ltd (No 4) (2007) 25 ACLC 177, [2007] FCA 220 at [35]; and Grice v The State of Queensland [2005] QCA 298 at [7].
Among the pertinent considerations is whether it appears that the party sought to be made liable for costs on an indemnity basis has imprudently or unreasonably failed to accept a Calderbank offer of compromise.
That will often involve an attempt to form a view about the relevant strengths and weaknesses of the cases that ought to have been apparent to the parties when the offer was made: cf Baulderstone Hornibrook Engineering at [34]-[35]; and Brymount Pty Ltd v Cummins (No 2) [2005] NSWCA 69 at [11]-[14].”
[19] Neither party made reference to these authorities or the principles that they discuss. Two observations are relevant here. The plaintiff has not endeavoured to show “some good reason why another order should be made” other than indemnity costs. The second defendant has not endeavoured to “show that the offer was rejected unreasonably, judged in the circumstances known at the time it was made”.
[20] Despite the failure of the parties to address the issues it seems to me that I can properly form a view about the relevant maters. First, if the onus is on the plaintiff, he has made no attempt to discharge it. Presumably if anything could have been said it would have been. Secondly, the case was reasonably straightforward - the plaintiff in my view failed to advance any evidence on an essential part of his case. That was always his situation. There has been no sudden turn of events, such as a witness recanting or the like, that could have misled him into thinking that a different outcome was possible and reasonably open. Essentially there are no “countervailing circumstances” that Chesterman J spoke of in Emanuel Management that would justify an order for the payment of costs other than on the indemnity basis.
[21] In those circumstances it was imprudent of the plaintiff in the relevant sense not to accept the offers made.
[22] I order that the plaintiff pay the costs of the second defendant on the standard basis up and until 18 August 2009[6] and thereafter on the indemnity basis.
Footnotes
[1] [2011] QSC 268.
[2] From Reprint 3C. Section 316 in its present form is not relevant because the compulsory conference was held and the proceedings commenced (19 December 2008) in the Court before the commencement of the relevant amending legislation (1 July 2010) that altered s 316 and inserted s 316A – see s 668 WCRA.
[3] (1990) 170 CLR 534.
[4] At 557.
[5] Similar views have been previously expressed: Emanuel Management Pty Ltd (in liq) v Foster’s Brewing Group Ltd [2003] QSC 299, [36] (Chesterman J); Rathie v ING Life Ltd [2004] QSC 146, [46]-[57] (Wilson J); Anderson v AON Risk Services Australia Ltd [2004] QSC 180, [10] (P D McMurdo J).
[6] That is 14 days after the offer of 4 August 2009. The second defendant’s submission makes reference to a pre litigation mandatory final offer made under the Personal Injuries Proceedings Act 2002 of $70,000. There is no evidence of the amount of that offer. Assuming it to be as contended I am not prepared to presume imprudence in the rejection of it. Given the absence of some demonstration that it was imprudent for the plaintiff not to have accepted that offer at that time in the light of the then known facts I have ignored it.