Burrows v A.W. Bale & Son Solicitors & Anor (No. 2) [2022] QDC 155

DISTRICT COURT OF QUEENSLAND CITATION: Burrows v A.W. Bale & Son Solicitors & Anor (No. 2) [2022] QDC 155 PARTIES: KENNETH PATRICK BURROWS (plaintiff) v A.W. BALE & SON SOLICITORS (first defendant) and ANDREW BALE (second defendant) FILE NO/S: 1872 of 2017 DIVISION: Civil PROCEEDING: Costs application ORIGINATING COURT: District Court, Brisbane. DELIVERED ON: 14 July 2022 DELIVERED AT: Brisbane HEARING DATE: On the papers. Submissions received 10 June 2022 and 24 June 2022. JUDGES: Byrne QC DCJ ORDER: 1. Leave granted to file and read the affidavit of Andrew Orr dated 8 June 2022. 2. The plaintiff is pay the defendants’ costs of and incidental to the proceedings on the standard basis to and including 9 September 2019. 3. The plaintiff is to pay the defendants’ costs of and incidental to the proceedings on the indemnity basis from and including 10 September 2019. 4. These orders are to be read subject to any earlier orders made in relation to costs at any earlier stage of the proceedings. 5. Liberty to apply. -- 1 of 8 -- 2 CATCHWORDS: LEGISLATION: CASES: TORTS – NEGLIGENCE – PROFESSIONAL NEGLIGENCE – BREACH OF RETAINER – APPLICATION FOR COSTS – where the defendants were wholly successful in defending an action for professional negligence – where the defendants seek their costs of the proceeding on the indemnity basis – where the plaintiff concedes that the defendants should receive their costs but on the standard basis – where the action had poor prospects of success, particularly in relation to proof of causation of loss – where allegations were made by the plaintiff of fraudulent concealment which did not succeed at trial - where the plaintiff rejected a Calderbank offer almost three years prior to trial. Limitation of Actions Act 1974 (Qld) Public Trustee Act 1978 (Qld) Uniform Civil Procedure Rules 1999 (Qld) Burrows v A.W. Bale & Son Solicitors & Anor [2022] QDC 117 Calderbank v Calderbank [1975] 3 All ER 333 Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 Greer v Greer [2021] QCA 174 Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No. 2) [2005] 13 VR 435 J & D Rigging Pty Ltd v Agripower Australia Limited & Ors [2014] QCA 23 Johnston & Anor v Herrod & Ors [2012] QCA 361 Oshlack v Richmond River Council (1998) 193 CLR 72 Stewart v Atco Controls Pty Ltd (in liq) (No. 2) (2014) 252 CLR 331 COUNSEL: Mr. M. Donovan for the plaintiff. Mr P. McCafferty QC for the defendants. SOLICITORS: Brisbane Criminal Lawyers form the plaintiff. McInnes Wilson for the defendants. Background [1] The plaintiff sought damages for what was, in effect, alleged to be professional negligence and a breach of the implied terms of a retainer. I found for the defendants1 (“the earlier reasons”), and the issue of costs is now in dispute. Both parties 1 Burrows v A.W. Bale & Son Solicitors & Anor [2022] QDC 117. -- 2 of 8 -- 3 (correctly) agree that costs should follow the event and be awarded to the defendants. The plaintiff submits they should be on the standard basis while the defendants submit they should be awarded on the indemnity basis.2 [2] The defendants submit that indemnity costs are appropriate because: (1) The plaintiff commenced and persisted with what was a hopeless case; (2) The plaintiff made and persisted with allegations of fraud and improper conduct which was unfounded and prejudicial to the professional character and reputation of the defendants; and (3) In that context, the plaintiff rejected a Calderbank offer,3 which rejection was unreasonable or imprudent. [3] In essence, the plaintiff replies that: (1) There were unusual factual features that justified the commencement and maintenance of the proceedings; (2) The allegations of fraudulent concealment were justified on the evidence, even if they were not upheld as a finding of fact at trial; and (3) The rejection of the Calderbank offer was not unreasonable or imprudent in the circumstances. [4] The plaintiff has unfortunately referred to some factual allegations in his submissions which are not supported by evidence. Those allegations have been ignored for the purposes of considering the present application. Some applicable principles [5] Costs are ordinarily awarded on the standard basis unless there is “some relevant delinquency on the part of the unsuccessful party”.4 Shepherd J in Colgate-Palmolive Company v Cussons Pty Ltd,5 in oft quoted passages, provided a non-exhaustive list of possible considerations for departure from the usual course, but stressed that the focus must remain on whether the particular facts and circumstances of the case warrants the making of the order other than on the standard basis.6 The defendants’ submissions are based on some of those considerations. [6] The mere commencement of an action that has poor prospects of success will not usually, without more, justify an order for costs on the indemnity basis. The authorities where such an order has been made are instances where the Court has concluded that the proceeding has been commenced or continued for some ulterior 2 Rule 703 UCPR. 3 Calderbank v Calderbank [1975] 3 All ER 333. 4 Oshlack v Richmond River Council (1998) 193 CLR 72, 89. 5 (1993) 46 FCR 225, 231 & 234. 6 See also Johnston & Anor v Herrod & Ors [2012] QCA 361, [11]. -- 3 of 8 -- 4 motive, where the Court forms such an adverse view of the merits of the case that it considers that it must have been advanced in wilful disregard of the known facts or clearly established law, where it should never have been run or where it has resulted in the undue prolongation of the case by the making of groundless contentions.7 [7] Indemnity costs should only be ordered following a rejection of a Calderbank offer if the Court is satisfied that the rejecting party acted unreasonably or imprudently in rejecting the offer; something more than the mere refusal is often required to establish unreasonableness or imprudence,8 but something more than prospects of success in the litigation may be required for a refusal to be not unreasonable or not imprudent.9 Relevant considerations in considering an indemnity costs order on the basis of a refusal of a Calderbank offer are outlined in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No. 2).10 Some further facts [8] These reasons should of course be read in light of the earlier Reasons, but there are some further pertinent facts adduced by way of affidavit on behalf of the defendants on the costs application, none of which have been disputed by the plaintiff. [9] As noted in the earlier reasons, the proceedings were commenced on 16 September 2016, after which there was the usual exchange of pleadings. On 1 February 2017, the defendants notified the plaintiff of their intention to apply for summary judgment based primarily on the proposition that the plaintiff’s claim was statute barred under the Limitation of Actions Act 1974. The defendants suggested resolving the claim on the basis that the claim be discontinued and the parties each bear their own costs. It is not suggested that it was a Calderbank offer, and it was not accepted by the plaintiff. [10] The application for summary judgment was listed for hearing on 10 April 2017. On that date, at 8.18am, the plaintiff served an unsealed Amended Statement of Claim, together with its submissions on the summary judgment application. The Amended Statement of Claim introduced for the first time the allegation that the defendants had fraudulently concealed the asserted breach of duty. As I understand it, the application did not proceed that day. [11] On 23 May 2018, the parties participated in a mediation. [12] On 26 August 2019, the defendants served a Calderbank offer, in the following terms: (1) The defendants pay the plaintiff $20,000 inclusive of interest and costs within 28 days of the agreement being signed; 7 Greer v Greer [2021] QCA 174, [11]. 8 J & D Rigging Pty Ltd v Agripower Australia Limited & Ors [2014] QCA 23, [5]-[6]. 9 Stewart v Atco Controls Pty Ltd (in liq) (No. 2) (2014) 252 CLR 331, [4]. 10 [2005] 13 VR 435, [25] cited favourably in J & D Rigging at [6]. -- 4 of 8 -- 5 (2) The plaintiff discontinues the claim against the defendants within seven days of receipt of the settlement sum; (3) The defendants waive their entitlement to a costs order made earlier in their favour; and (4) The defendants bear their own costs of the proceedings. This offer was expressed to remain open for 14 days, and hence would expire on 9 September 2019, and it was expressly stated that it would be relied on for the purposes of seeking indemnity costs if the need arose.11 [13] On the same day a separate 18-page letter was sent by the defendants’ solicitor to the plaintiff’s solicitor outlining why they contended his case could not succeed. Several of the stated reasons were reminiscent of and foreshadowed the earlier reasons.12 [14] On 11 September 2019, the plaintiff’s solicitor emailed the defendants’ solicitor indicating that he would be seeking instructions but expected the offer to be “rejected outright”. He further indicated that the plaintiff “has nothing to lose in taking this matter to trial”.13 [15] On 11 October 2019, the plaintiff’s solicitor again emailed the defendants’ solicitor formally notifying the rejection of the offer. No further reason was provided.14 Consideration [16] I broadly accept the plaintiff’s submission that the commencement of the proceedings must be seen in light of some unusual features. Accepting that the plaintiff was not actually aware that the property had been forfeited to the State until told by a police officer on 1 December 2015,15 the proceedings were then commenced with reasonable expedition after the ruling by Ann Lyons J consolidated the position at law. [17] It is, I think, telling that I did not find the plaintiff had been dishonest in denying having signed the written instructions dated 15 November 2004. In fact, in cross- examination he accepted that he might have done.16 It is feasible that he did not, by the time the proceedings were commenced, remember that he had signed the instructions and had received the advice that I found he did receive. The commencement of the proceedings must be seen in that context for present purposes. In those circumstances, and while also accepting the proceedings were, even at that early stage, obviously susceptible to failure on the grounds ultimately found for the 11 Affidavit of Andrew Orr dated 8 June 2022, Exhibit “AO-1”, page 58 12 Affidavit of Andrew Orr dated 8 June 2022, Exhibit “AO-1”, page 38. 13 Affidavit of Andrew Orr dated 8 June 2022, Exhibit “AO-1”, page 75. 14 Affidavit of Andrew Orr dated 8 June 2022, Exhibit “AO-1”, page 78. 15 The earlier reasons, [34]. 16 The earlier reasons, [32]. -- 5 of 8 -- 6 defendants, I am not satisfied they were brought with some ulterior motive or other than in good faith. [18] The real possibility that the plaintiff had forgotten the advice he received and the instructions he gave on or about 15 November 2004 is also important in assessing the allegation of fraudulent concealment for the purposes of this application. My finding that he had received the advice and signed the instructions was central to accepting that the possibility of automatic forfeiture had not been concealed from the plaintiff.17 That was not a matter of factual agreement between the parties and was reasonably put in dispute at trial. [19] It does not assist the plaintiff for present purposes that the allegations of dishonesty were raised on the foundation of an obviously dubious ability to recall events of so many years earlier. Nor does it assist him that the other allegations of dishonesty were pressed in relation to filing affidavits and the receipt of Legal Aid funding when, on any view of it, those proceedings were pending. However, I would not be inclined to deviate from an order for costs on the standard basis if things had remained only at the raising of and pursuit of the allegations. They did not. [20] In my view, the rejection of the Calderbank offer was unreasonable and imprudent and the continuation of the proceedings thereafter was unreasonable and suggestive of being continued in wilful disregard of the known facts and clearly established law. It is also suggestive of the proceedings being continued for some ulterior motive. [21] Even allowing for the real possibility that the plaintiff did not recall giving the instructions on or about 15 November 2004 and receiving advice on the same day, it must have been obvious to anyone advised by a legal practitioner exercising the reasonable care, diligence and skill of a reasonably competent practitioner that the fraudulent concealment case was unlikely to succeed, and that the case on causation had very little, if any, merit at all. [22] These deficiencies were identified, by one means or another, in the letter from the defendants’ solicitor of 26 August 2019. The response, which was presumably either given on instructions or reflected instructions earlier given, was that the plaintiff had “nothing to lose” in proceeding with the matter. That comment tends to a finding that the plaintiff intended to proceed regardless of the substantial hurdles in the way of success, and hence to the existence improper motives in the conduct of the litigation. [23] Even if one were to ignore that comment, the rejection of an offer of value and the continuation of the proceedings in light of the identified deficiencies permits the inferences to be drawn as referred to in paragraph 22 above. [24] The plaintiff has submitted there are features of the case which mean that the rejection of the offer was in fact reasonable. In light of the above, they can be dealt with briefly. 17 The earlier reasons, [113]. -- 6 of 8 -- 7 [25] First, any present reliance on the issue raised in the earlier reasons about whether the plaintiff remained under a disability when on parole is misplaced. That was an issue raised by me at the trial. It was not raised by the plaintiff, and in fact the plaintiff admitted in the pleadings that he was not under a disability when on parole. The present reliance on that argument is, in my view, an example of hindsight reasoning. It does not reflect the state of mind at the time and hence does not bear on the reasonableness of the rejection at that time. [26] Secondly, and similarly, reliance on Part 7 of the Public Trustee Act 1978 is misplaced. This argument did not form any part of the plaintiff’s case at trial. In any event, Part 7 of the Act is not concerned with whether the plaintiff was under a disability, but rather deals with procedural steps which must be taken before proceedings are able to be commenced by a prisoner. This reliance appears also to be hindsight reasoning. [27] Thirdly, proof of negligence did not justify the rejection of the offer given that there were no reasonable prospects of proving causation, and the real difficulties in establishing fraudulent concealment. [28] Fourthly, the time that the forfeiture proceedings were on foot was largely irrelevant in the trial given the particularised allegations of negligence boiled down to a failure to appreciate when the automatic forfeiture period expired, prior to its expiration. [29] Fifthly, the unsigned copy of the disclosed instructions document and the lack of file notes by the defendants goes to the prospects of success on the litigation. The plaintiff needs to prove more than that to show that the rejection was not unreasonable or not imprudent.18 [30] Sixthly, the plaintiff contends that the value of the offer did not take into account the value of the loss suffered. While that may be a relevant consideration in some cases, in this case it cannot overwhelm the fact that there was an offer of real value on the table in circumstances where the plaintiff’s prospects of success were so poor. [31] Seventhly, the plaintiff has elected to disclose and to make broad comparisons between an offer made to him and the settlement with his wife, who was at one stage of the proceedings the second plaintiff. If this can properly be taken into account, which I doubt, it too cannot overwhelm the features mentioned immediately above. [32] Further, the criteria considered in Hazeldene’s Chicken Farms support the making of an indemnity costs order, at least once the offer was allowed to expire. [33] In all the circumstances, I consider the plaintiff should pay the costs of the defendants on the indemnity basis from the day after the date the Calderbank offer expired on 9 September 2019. 18 Stewart v Atco Controls Pty Ltd (in liq) (No. 2), ibid. -- 7 of 8 -- 8 Orders [34] My orders are as follows: 1. Leave granted to file and read the affidavit of Andrew Orr dated 8 June 2022. 2. The plaintiff is pay the defendants’ costs of and incidental to the proceedings on the standard basis to and including 9 September 2019. 3. The plaintiff is to pay the defendants’ costs of and incidental to the proceedings on the indemnity basis from and including 10 September 2019. 4. These orders are to be read subject to any earlier orders made in relation to costs at any earlier stage of the proceedings. 5. Liberty to apply. -- 8 of 8 --