Drake v PKF (Gold Coast) Pty Ltd & Anor (No 2) [2023] QSC 66

SUPREME COURT OF QUEENSLAND CITATION: Drake v PKF (Gold Coast) Pty Ltd & Anor (No 2) [2023] QSC 66 PARTIES: PETER CHARLES DRAKE (plaintiff/respondent) v PKF (GOLD COAST) PTY LTD ACN 137 531 250 (first defendant/applicant) SCOTT JAMES McMURTRIE (second defendant/applicant) FILE NO: BS No 2822 of 2019 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 4 April 2023 DELIVERED AT: Brisbane HEARING DATE: Heard on the papers (defendants’ written submissions on costs filed 23 March 2023; plaintiff’s written submissions on costs filed 3 April 2023; defendants’ written submissions in reply on costs filed 3 April 2023) JUDGE: Cooper J ORDER: 1. The plaintiff pay the defendants’ costs of the application filed on 27 February 2023 assessed on the indemnity basis if not agreed. 2. To the extent that costs of the proceeding have not been awarded by existing orders (including paragraph 1 of these orders), the plaintiff pay the defendants’ costs of the proceeding, including reserved costs, assessed on the standard basis if not agreed. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – RELEVANT CONSIDERATIONS GENERALLY – where the plaintiff commenced proceedings in 2019 arising from alleged negligence of the first and second defendants in 2013 – where the tenth amended statement of claim as relating to causation and loss was struck out without leave to replead – where the proceeding was dismissed for want of prosecution – whether indemnity costs should be awarded Uniform Civil Procedure Rules 1999 (Qld), r 681, r 703 -- 1 of 5 -- 2 AKS Investments Pty Ltd v National Australia Bank & Anor (No 2) [2012] QSC 282, considered Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, cited Drake v PKF (Gold Coast) Pty Ltd & Anor [2022] QSC 197, related Drake v PKF (Gold Coast) Pty Ltd & Anor [2023] QSC 45, related COUNSEL: The plaintiff/respondent appeared on his own behalf M Jones for the defendants/applicants SOLICITORS: The plaintiff/respondent appeared on his own behalf Hall & Wilcox for the defendants/applicants [1] On 16 March 2023, I ordered that parts of the plaintiff’s tenth statement of claim be struck out, without leave to replead, and that the proceeding be dismissed for want of prosecution.1 [2] At the time I delivered judgment, I directed that the parties file and serve written submissions on costs so that question could be decided on the papers. Those submissions have been filed. This is my decision on the question of costs. Parties’ submissions [3] The defendants have sought payment of their costs on three alternative bases: (a) that the plaintiff pay their costs of the proceeding, including reserved costs, on the standard basis up to 25 July 2022 and on the indemnity basis thereafter, by reason of him having imprudently refused an offer to settle dated 11 July 2022,2 which expired on 25 July 2022; (b) alternatively, that the plaintiff pay their costs of the proceeding, including reserved costs, on the standard basis, save that the plaintiff should pay the costs of the application filed on 27 February 2023 on the indemnity basis by reason of his defiance of the reasons of Hindman J in Drake v PKF (Gold Coast) Pty Ltd & Anor;3 (c) in the further alternative, that the plaintiff pay their costs of the application filed on 27 February 2023 and of the proceeding, including reserved costs, on the standard basis. [4] The plaintiff submitted that he should only be ordered to pay costs of the proceeding from 30 April 2021, on the basis that the Court of Appeal effectively set aside all costs orders made before that date. He further submitted that no grounds exist that warrant the award of indemnity costs. 1 Drake v PKF (Gold Coast) Pty Ltd & Anor [2023] QSC 45. 2 Affidavit of Ceri Lynn McDonald filed 2 August 2022 (Court document 69), exhibit CLM-L. 3 [2022] QSC 197. -- 2 of 5 -- 3 Consideration [5] It is clear from the plaintiff’s written submissions that he accepts that the costs of the dismissal application and the proceeding should follow the event. This reflects the general position set out in r 681 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) that the costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court orders otherwise. [6] The real question is whether any part of the costs the plaintiff is ordered to pay should be assessed on the indemnity basis and, if so, which part. [7] Rule 703(1) of the UCPR confers a discretion to order that costs be assessed on the indemnity basis. While that discretion is unfettered, it is generally recognised that the discretion should not be exercised unless some feature of the case warrants a departure from the usual course of ordering that costs awarded against an unsuccessful party be assessed on the standard basis. The defendants rely on two features which have previously been recognised as warranting the exercise of the discretion to order indemnity costs:4 an imprudent refusal of an offer to compromise and wilful disregard or known facts or clearly established law. Refusal of offer to compromise [8] As Applegarth J stated in AKS Investments Pty Ltd v National Australia Bank & Anor (No 2):5 “… In considering the submission that the rejection of a Calderbank offer was unreasonable, a court should ordinarily have regard at least to the following matters: (a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree’s prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; (f) whether the offer foreshadowed an application for an indemnity costs order in the event of the offeree’s rejecting it.” [9] The letter dated 11 July 2022 set out what the defendants described as insurmountable issues with the plaintiff’s pleading of causation. The defendants offered to settle the proceeding on the basis that the plaintiff agreed to discontinue his claim and to pay 60% of the defendants’ costs of the proceeding assessed on the standard basis or, alternatively, a fixed agreed sum of $65,000 inclusive of GST. The letter clearly foreshadowed the defendants’ intention to rely upon the offer in support of a submission that the plaintiff pay their costs of the proceeding on the indemnity basis. 4 Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, 233. 5 [2012] QSC 282, [11]. -- 3 of 5 -- 4 [10] In my view, the discount offered on the costs that the plaintiff would pay if he accepted the offer was a genuine compromise compared with the costs the plaintiff would pay if his proceeding was dismissed. I do not accept the plaintiff’s submission that the offer was “disingenuous and not realistically capable of being accepted.” [11] I also consider that the fourteen days which the defendants allowed the plaintiff to consider the offer was a reasonable period. [12] Nevertheless, I am not persuaded that the plaintiff’s refusal of the offer to compromise was imprudent. The offer was made before the previous strike out and dismissal application was heard by Hindman J on 2 August 2022. Although her Honour struck out the plaintiff’s statement of claim, she granted leave to replead. The defendants applied for costs on the indemnity basis from 25 July 2022 on that occasion,6 however the plaintiff was ordered to pay costs on the standard basis.7 That seems to me to be consistent with Hindman J’s refusal to act on the basis that the plaintiff’s proceeding had negligible prospects of success.8 [13] I also treated the plaintiff’s prospects of success as a neutral factor in my consideration of the dismissal application.9 If the plaintiff had pleaded his causation case in a form which addressed the deficiencies identified by Hindman J it is unlikely that the proceeding would have been dismissed. I am not prepared to determine the question of costs on the basis that the plaintiff’s causation case could never have been pleaded conformably with the requirements of the UCPR or that, if the proceeding had progressed beyond the pleadings stage, the plaintiff’s claim was so untenable that it was imprudent for the plaintiff to refuse the offer of 11 July 2022. [14] I am not satisfied that the circumstances warrant an order that the plaintiff pay the defendants’ costs on the indemnity basis from 25 July 2022. Wilful disregard of clearly established law [15] I am, however, satisfied that the plaintiff’s persistence in resisting the application filed on 27 February 2023 warrants an order that he pay the defendants’ costs of and incidental to that application on the indemnity basis. [16] As noted in my reasons for dismissing the proceeding,10 by the time that application came on for hearing before me the plaintiff had been alerted to the deficiencies in his pleaded causation case by Dalton J (in February 2020 and August 2020), by Martin J (in December 2021) and by Flanagan J (in May 2022). [17] At the hearing before Hindman J, the defendants delivered written submissions which comprehensively addressed relevant legal principles and the deficiencies in the plaintiff’s pleading of causation.11 Hindman J accepted those submissions and clearly articulated the matters which the plaintiff needed to address to properly plead causation.12 6 Amended application filed 2 August 2022 (Court document 71). 7 Orders of Hindman J dated 16 September 2002 (Court document 76). 8 Drake v PKF (Gold Coast) Pty Ltd & Anor [2022] QSC 197, [43]. 9 Drake v PKF (Gold Coast) Pty Ltd & Anor [2023] QSC 45, [47]-[48]. 10 Drake v PKF (Gold Coast) Pty Ltd & Anor [2023] QSC 45, [34]-[48]. 11 Defendants’ outline of submissions filed 2 August 2022 (Court document 68), [19]-[24] and [48]-[61]. 12 Drake v PKF (Gold Coast) Pty Ltd & Anor [2022] QSC 197, [35]-[37]. -- 4 of 5 -- 5 [18] The plaintiff did not address those matters, yet adopted the unsustainable position that the tenth statement of claim accorded with the decision of Hindman J.13 [19] I accept that, by this conduct, the plaintiff advanced the tenth statement of claim in wilful disregard of clearly established law. That conduct put the defendants to the expense of bringing the further application which was filed on 23 February 2023. In my view, those circumstances make this an appropriate case in which to order that the plaintiff pay the defendants’ costs of and incidental to that application on the indemnity basis. [20] I am also satisfied that the plaintiff should pay the defendants’ costs of the proceeding, including reserved costs, on the standard basis to the extent those costs have not already been awarded by existing orders. I do not accept the plaintiff’s submission that the decision of the Court of Appeal14 means he should only pay the defendants’ costs of the proceeding from 30 April 2021. [21] The Court of Appeal set aside the orders made by Dalton J on 26 August 2020,15 including the order that the plaintiff pay the defendants’ costs of and incidental to the proceeding, including reserved costs, on the standard basis. Setting aside that cost order simply returned the parties to the position they were in before Dalton J made the order dismissing the proceeding and reflected the fact that, after the successful appeal, the proceeding had not been resolved in the defendants’ favour. It cannot be construed as a decision that the defendant could no longer be ordered to pay costs incurred prior to the determination of the appeal if the proceeding was later resolved in the defendants’ favour. That is the position which has now been reached and, in my view, there is no reason why the plaintiff should not be ordered to pay the costs of the proceeding incurred before the determination of the appeal. Conclusion [22] The orders I will make are: 1. The plaintiff pay the defendants’ costs of the application filed on 27 February 2023 assessed on the indemnity basis if not agreed. 2. To the extent that costs of the proceeding have not been awarded by existing orders (including paragraph 1 of these orders), the plaintiff pay the defendants’ costs of the proceeding, including reserved costs, assessed on the standard basis if not agreed. 13 Drake v PKF (Gold Coast) Pty Ltd & Anor [2023] QSC 45, [20]-[21] and [51]. 14 Drake v PKF (Gold Coast) Pty Ltd & Anor [2021] QCA 83. 15 Court document 36. -- 5 of 5 --