Clapham v Butler & Anor (No 2) [2016] QDC 286

DISTRICT COURT OF QUEENSLAND CITATION: Clapham v Butler & Anor No. 2 [2016] QDC 286 PARTIES: DONALD IAN CLAPHAM (plaintiff) v JENIE JUDY JESSIE BUTLER (first defendant) and ALLIANZ AUSTRALIA INSURANCE LTD (ABN 15 000 122 850) (second defendant) FILE NO/S: BD 3469/15 DIVISION: PROCEEDING: Application for costs ORIGINATING COURT: District Court of Queensland DELIVERED ON: 15 November 2016 DELIVERED AT: Brisbane HEARING DATE: Written submissions 8 November 2016 JUDGE: Andrews SC DCJ ORDER: Order that the plaintiff pay the defendants’ costs of the proceeding on the standard basis CATCHWORDS: COSTS – where judgment sum less than insurer’s mandatory final offer and less than insurer’s later offer made after the proceeding commenced – whether the plaintiff should pay costs from date the proceeding commenced or date of the insurer’s later offer – whether UCPR r 361 prevails over Motor Accident Insurance Act 1994 s 55F(2)(c) Motor Accident Insurance Act 1994 s 55F(1), (2) and (6) Uniform Civil Procedure Rules r 361 COUNSEL: Moon for the plaintiff Morton for the first and second defendants SOLICITORS: Dwyer Law Group for the plaintiff Moray & Agnew for the first and second defendants -- 1 of 5 -- 2 Background [1] On 27 November 2013 the plaintiff was injured in a motor vehicle accident. [2] On 27 July 2015 there was a compulsory conference, mandatory final offers were exchanged and the insurer made a mandatory final offer pursuant to s 51C of Motor Accident Insurance Act 1994 (MAIA) of $50,000 plus regulation costs. The offer was not accepted. [3] On 4 September 2015 the plaintiff commenced this proceeding for damages for his personal injuries arising out of the motor vehicle accident. [4] On 3 August 2016 the defendants served an offer under the Uniform Civil Procedure Rules (UCPR) of $65,000 plus regulation costs. The offer was not accepted. [5] On 27 and 28 October 2016 the trial was heard. [6] On 2 November 2016 the plaintiff obtained judgment in the sum of $18,750.05. [7] Consider first the regime under the MAIA. The amount awarded was less than the insurer’s mandatory final offer of $50,000 plus regulation costs. Prima facie, pursuant to the MVIA s 55F(2)(c), costs are to be awarded to the insurer on a standard basis from the date on which the proceeding started, namely 4 September 2015. [8] Consider second the regime under the UCPR. The plaintiff did not obtain an order more favourable than the offer made under the UCPR. Pursuant to r 361(2), unless a party (the insurer in this application for costs) shows another order for costs is appropriate in the circumstances, the court must order the defendants to pay the plaintiff’s costs, calculated on the standard basis, up to and including 3 August 2016, the day of service of the offer, and order the plaintiff to pay the defendant’s costs calculated on the standard basis, after that date. Issues [9] Are the costs regimes under the MAIA and the UCPR in conflict (as the plaintiff submits)? Should the plaintiff recover his costs of the proceeding on the standard basis until 3 August 2016, or must he recover no costs? Is MAIA s 55F(2) mandatory so as to remove from the court a discretion (as the defendants submit)? If the court has a discretion to award costs differently from the way prescribed by MAIA s 55F(2), should the discretion be exercised in favour of the defendants (as the defendants submit)? May the insurer recover its costs from 4 September 2015 or only from 3 August 2016? If the insurer may recover its costs from 4 September 2015, was the award of damages affected by factors that were not reasonably foreseeable at the time of the exchange of mandatory final offers on 27 July 2015 so as to enliven MAIA s 55F(6) and so as to excuse the plaintiff from paying the insurer’s costs of investigations or gathering evidence after the conclusion of the compulsory conference? The MAIA s 55F [10] So far as is relevant, the MAIA provides: 55F Costs in cases involving relatively small awards of damages -- 2 of 5 -- 3 (1) This section applies if a court awards an amount equal to the upper offer limit [$67,450] or less in damages in a proceeding based on a motor vehicle claim… (2) If the court awards an amount equal to the lower offer limit [$40,460] or less, the court must apply the following principles – … (c) If the amount awarded is equal to, or less than, the insurer’s mandatory final offer, costs are to be awarded to the insurer on a standard basis as from the date on which the proceeding started (but no award is to be made for costs up to that date). … (6) Unless an award of damages is affected by factors that were not reasonably foreseeable at the time of the exchange of mandatory final offers, the court must not award costs to a party related to investigations or gathering of evidence by the party after – (a) The conclusion of the compulsory conference; or (b) If the parties or the court dispenses with a compulsory conference – the date when the parties completed the exchange of mandatory final offers. The applicable monetary amounts for the “upper offer limit” and the “lower offer limit” have been inserted in square brackets above. UCPR r 361 [11] Chapter 9 Part 5 of the UCPR contains provisions relating to offers to settle made under Part 5. Part 5 presupposes that offers will be made by a “party to a proceeding”.1 It follows that Part 5 of the UCPR is a regime which provides for the making of offers once a proceeding has started and which provides for the consequences which are generally to follow if those offers are not accepted. [12] Rule 361 of the UCPR provides, so far as is relevant: 361 Costs if offer by defendant (1) This rule applies if – (a) The defendant makes an offer that is not accepted by the plaintiff and the plaintiff does not obtain an order that is more favourable to the plaintiff than the offer; … (2) Unless a party shows another order for costs is appropriate in the circumstances, the court must – (a) Order the defendant to pay the plaintiff’s costs, calculated on the standard basis, up to an including the day of service of the office; and (b) Order the plaintiff to pay the defendant’s costs, calculated on the standard basis, after the day of service of the offer… The plaintiff’s primary submission 1 Cf UCPR Rule 353(1). -- 3 of 5 -- 4 [13] For the plaintiff, it was submitted that there is conflict between UCPR r 361 and MAIA s 55F; that when a party elects to make an offer under r 361, subsequent to the making of mandatory final offers under the MAIA, that r 361 should prevail, subject to the court not being satisfied that “another order for costs is appropriate in the circumstances.” Analysis [14] The provisions in the UCPR, concerned with offers after proceedings commence, can be contrasted with the regime under the MAIA for making mandatory offers before proceedings commence.2 [15] The UCPR came into operation about five years after the MAIA. Is there a conflict? The plaintiff submits there is. The parties took opposing views about how the conflict would be resolved, if there is a conflict. The plaintiff submitted the UCPR prevails. The defendants submitted the statute prevails. The defendants submitted that the statute must prevail over subordinate legislation. [16] The parties did not make any references to authority. [17] I need not decide whether there is a conflict or whether UCPR r 361 was intended to have the capacity to “prevail” so as to allow a court to make an order inconsistent with the provisions of MAIA s 55F. UCPR r 361 permits a party to show that another order is appropriate in the circumstances. The defendants rely upon the insurer’s offer before the proceeding commenced as a circumstance relevant to the proper order for costs of the proceeding. I accept that an offer in compliance with the statutory regime in the MAIA is a relevant circumstance for a court considering UCPR r 361 and whether another order is appropriate. [18] If I have a discretion to ignore the operation of MAIA s 55F this is not an occasion to do so. All the plaintiff raises against the insurer is the fact that the plaintiff also rejected the insurer’s later and higher offer made after the proceeding commenced. That later event does not detract from the merits and relevance of the plaintiff’s refusal of the insurer’s earlier offer Whether this order for costs is properly to be founded on MAIA s 55F or upon UCPR r 361, I am satisfied that it is appropriate to consider the mandatory offer made by the insurer before the proceeding commenced. Having regard to that offer, it is just that the plaintiff pay the insurer’s costs on the standard basis from 4 September 2015, when the proceeding commenced. The plaintiff’s secondary submission [19] The plaintiff submitted that the event that an order is to be made under s 55F of the MAIA than the court should have regard to s 55F(6) so as to provide in the order that the defendants are not entitled to any costs related to investigations or gathering of evidence after the conclusion of the compulsory conference. [20] Whether this order for costs is properly to be founded on MAIA s 55F or upon UCPR r 361, I reject the submission because the award of damages was affected by factors that were not reasonably foreseeable by the insurer at the time of the exchange of mandatory final offers. 2 Cf MAIA ss 51C and 51D. -- 4 of 5 -- 5 [21] Between the date of the collision and the date of the compulsory conference and exchange of mandatory final offers the plaintiff had not disclosed to any medical practitioner a relevant prior injury to his knee and relevant persisting symptoms. The fact that those matters, rather than the collision, were the cause of the plaintiff’s knee problems affected the award of damages substantially. Without the discovery of those matters after the compulsory conference and before hearing, the award of damages would have been substantially more. -- 5 of 5 --