Ballandis v Swebbs & Anor (No 2) [2014] QDC 143

DISTRICT COURT OF QUEENSLAND CITATION: Ballandis v Swebbs & Anor (No 2) [2014] QDC 143 PARTIES: CHRISTOPHER BALLANDIS (plaintiff) v JACK JOSEPH SWEBBS (first defendant) and AAI LIMITED ACN 48 005 297 807 TRADING AS SUNCORP METWAY INSURANCE LIMITED ACN 075 695 966 (second defendant) FILE NO/S: D2/13 DIVISION: Trial PROCEEDING: Civil ORIGINATING COURT: Rockhampton District Court DELIVERED ON: 19 June 2014 DELIVERED AT: Rockhampton HEARING DATE: Hearing on the papers. JUDGE: Smith DCJ ORDER: 1. The second defendant is to pay the plaintiff’s costs of and incidental to the proceeding as agreed or assessed on a standard basis up to but not including 8 January 2013 on the District Court Scale and not in excess of the declared costs limit of $2,500. 2. The plaintiff is to pay the second defendant’s costs of and incidental to the proceeding from 8 January 2013 as agreed or to be assessed on the standard basis on the District Court Scale (with the exception of costs relating to investigations and the gathering of evidence after the date of the compulsory conference which includes the reserved costs of and incidental to the application filed on 24 March 2014). 3. The second defendant is to pay the plaintiff’s costs relating to investigations and the gathering of evidence after the date of the compulsory conference which includes the reserved costs of and incidental to the application filed on 24 March 2014 as agreed or to be assessed on the standard basis on the District Court -- 1 of 13 -- 2 scale. 4. That the net assessed costs ordered to be paid by the plaintiff be set off against the judgment sum prior to any payment by the second defendant to the plaintiff of any part of the judgment sum. 5. Liberty to apply. CATCHWORDS: COSTS- where the judgment for the plaintiff was not greater than the mandatory final offer or of offers made under UCPR- costs of investigations and application after the compulsory conference Motor Accident Insurance Act 1994 (Q) ss 4, 51B, 51C, 55F Uniform Civil Procedure Rules 1999 (Q) r 361, 681 Motor Accident Insurance Regulations 2004 (Q) r 27A Ballandis v Swebbs and Anor [2014] QDC 129 Calderbank v Calderbank [1975] 3 All ER 333 Distant v Queensland Rail [2002] QSC 271 Gitsham v Suncorp Metway Insurance Ltd [2003] 2 Qd R 251 Ross v Suncorp Metway Insurance Ltd [2002] QCA 93 Sheridan v Warrina Community Co-operative Ltd & Anor [2004] QCA 308 COUNSEL: Written Submissions from the plaintiff received 10 June 2014, written submissions from the second defendant received 10 June 2014, further written submissions from the second defendant received 11 June 2014. Further written submissions from the plaintiff received 18 June 2014. SOLICITORS: O’Donnell Legal for the plaintiff Quinlan Miller and Treston for the second defendant Introduction [1] This is the decision with respect to costs consequent on the decision in Ballandis v Swebbs & Anor [2014] QDC 129. [2] In that matter I gave judgment in favour of the plaintiff against the second defendant in the sum of $32,971.24. [3] The plaintiff submits that he should have his costs. On the other hand, the defendant submits the plaintiff should have his costs up to the sum of $2,500 until 8 January 2013 (on the applicable Magistrates Court scale) and thereafter the plaintiff should pay the second defendant’s costs of and incidental to the proceeding including reserved costs on the standard basis assessed on the District Court scale. -- 2 of 13 -- 3 Background [4] The material discloses that as early as 13 September 2011 the second defendant was put on notice that the plaintiff’s view was that the Civil Liability Act 2003 (Q) (“CLA”) did not apply (Exhibit TOD 2 at p 6 – affidavit of Thomas O’Donnell filed 25 March 2014). Suncorp took the view that this was a CLA matter (see Exhibit 2.5 affidavit of O’Donnell at p 8). [5] Further correspondence on this question occurred between the parties. [6] Prior to the compulsory conference a statutory declaration from Jack Swebbs was obtained by the insurer on this question (Exhibit TOD 9 affidavit of O’Donnell at pp 21-23.) [7] The compulsory conference was held on 30 November 2012. The second defendant’s solicitor certified that all investigative material had been obtained and disclosed (TOD 13 affidavit of O’Donnell at p 28). [8] Proceedings were issued by the plaintiff on 8 January 2013. [9] After the compulsory conference on 6 November 2013 the second defendant disclosed an investigator’s report (TOD 15 affidavit of O’Donnell at p 31) relevant to the plaintiff’s employment with Thorpe both on the quantum issue and on the CLA point. Mr Thorpe alleged he had an agreement with Mr Wright whereby Thorpe had purchased the ute and Wright was paying it off. [10] In a letter dated 30 August 2013 Mr O’Donnell requested a legible copy of the wage records. He also pointed out the investigator’s report had not been disclosed before the compulsory conference and this fact would be relied on with respect of costs. Documents relating to the agreement between Mr Thorpe and Mr Wright were requested. Insurance details of the vehicle were also requested (see TOD 18 affidavit of O’Donnell at p 48). [11] Further correspondence as to disclosure occurred between the parties. [12] On 6 November 2013, the second defendant disclosed a further investigation report (Exhibit TOD 21 affidavit of O’Donnell at p 52 and TOD22 at p 53.) [13] Further correspondence as to disclosure occurred (see affidavit of O’Donnell filed by leave on 31 March 2014). [14] On 24 March 2014 an application was filed by the plaintiff for disclosure of all documents relating to the sale of the Ford Ute by Kris Thorpe to Ricky Wright and all relevant loan documents. Alternatively the application sought an order that the second defendant file an affidavit that these documents did not exist. [15] The application did not proceed on 31 March 2014, when the second defendant advised the plaintiff it did not have such documents in its possession. [16] Ms Miller, a solicitor with the second defendant’s lawyers, has sworn an affidavit as to the background of offers. -- 3 of 13 -- 4 [17] On 13 November 2012 pursuant to the Motor Accident Insurance Act 1994 (Q) (“MAIA”) a compulsory conference was convened by the plaintiff and the second defendant at which the following mandatory final offers were exchanged: (a) the plaintiff - $200,000 plus costs; (b) the second defendant - $55,000 plus costs on a standard basis. [18] The mandatory final offers expired 14 days after the date of the compulsory conference. [19] On 12 April 2013, pursuant to Chapter 9 Part 5 of the Uniform Civil Procedure Rules 1999 (”UCPR”), the second defendant formally offered to settle the plaintiff’s claim in the sum of $75,000 plus standard costs. [20] On 19 July 2013 a further offer under the UCPR was made by the second defendant in the sum of $40,000 plus statutory costs. [21] On 11 December 2013 a further offer was made by the second defendant in the sum of $40,000 plus statutory costs. [22] On 27 December 2013, pursuant to the UCPR, the plaintiff offered to settle the claim in the sum of $55,000 plus costs on the District Court scale as assessed or agreed. [23] On 6 January 2014, pursuant to the decision of Calderbank v Calderbank [1975] 3 All ER 333, the second defendant offered to settle the claim in the sum of $55,000 inclusive of costs. [24] On 19 February 2014, pursuant to Calderbank v Calderbank (supra), the second defendant offered to settle the plaintiff’s claim in the sum of $55,000 inclusive of costs. [25] On 5 May 2014, pursuant to Calderbank v Calderbank (supra), the second defendant offered to settle the plaintiff’s claim for the sum of $65,000 inclusive of costs. Submissions Plaintiff’s submissions [26] The plaintiff submits that the award of costs is governed by the provisions of s 55F of the MAIA. It is submitted that there was a significant issue in relation to whether or not the assessment of damages was to be undertaken in the context of the CLA. It is further submitted that pursuant to UCPR r 360(1)(b) another order is more appropriate that the usual order as to costs. [27] It is further submitted there was late disclosure of evidence relative to the CLA claim, which meant that the plaintiff was never in a position to form a view as to the reasonableness of the offers made by the second defendant. It is submitted that a party should have the ability to fully consider the reasonableness of an offer (Ross v Suncorp Metway Insurance Ltd [2002] QCA 93 at [28]-[30]). -- 4 of 13 -- 5 [28] It is submitted that the second defendant certified on 30 November 2012 that all investigative material required had been obtained. Since that certification the second defendant had: (a) obtained an investigative report from loss adjustors; (b) obtained a statement from Kris Thorpe; (c) disclosed pay information; (d) an unsigned statement of Ricky Wright; (e) an unsigned statement of Kris Thorpe. [29] It is submitted that these matters were not reasonably foreseeable at the time of the mandatory final offers. [30] It relies on Distant v Queensland Rail [2002] QSC 271. [31] It is submitted the plaintiff should have its costs pursuant to s 55F(4) of MAIA as the second defendant failed to comply with the procedural obligations in relation to certification. [32] In further written submissions the plaintiff submitted: (a) It is accepted there was ongoing competing evidence as to the CLA point, but the critical issue is the time of disclosure. (b) There was no clear appreciation of the offer of $55,000. (c) The Calderbank offers were not sufficiently clear, certainly as to the provision for costs. (d) The stay and set off should be dealt with on a separate application. (e) The plaintiff was unable to settle in light of disclosure issues. (f) The damages sought were in excess of the Magistrates Court jurisdiction. (g) The plaintiff was required to bring the application because of the CLA point. Second defendant’s submissions [33] On the other hand, the second defendant’s submissions are that, pursuant to s 51C(10) of MAIA, the court must have regard to the mandatory final offers in making a decision about costs. It is submitted the plaintiff did not achieve a result more favourable than his MFO. It is submitted that the second defendant’s MFO is clearly relevant to a determination of costs and therefore the second defendant should be ordered to pay the costs of the plaintiff up until the date proceedings were issued on a standard basis (on the applicable Magistrates Court scale) and subject to the declared costs limit, and the plaintiff should be ordered to pay the second defendant’s costs of and incidental to the proceedings on the standard basis on the District Court scale as and from 8 January 2013. [34] It is submitted that the causation issue regarding the rib fracture was also a relevant issue given the contemporaneous medical evidence. The CLA issue was always a relevant issue. The issues were reasonably foreseeable. [35] It is further submitted that the second defendant ought to have its costs relating to the application dated 31 March 2014. -- 5 of 13 -- 6 [36] It is further submitted that the claim ought to have been issued in the Magistrates Court. [37] The second defendant further submits that a set-off should be ordered and a stay should be ordered until such time as the costs of the second defendant are paid. [38] In further written submissions by way of response to the plaintiff’s submissions, the second defendant submits: (a) the focus of s55F of the MAIA is not from the plaintiff’s view; (b) the CLA point and the rib injury point had been raised well before the compulsory conference; (c) Distant’s case (supra) should be distinguished because there was an unforeseen medical condition. I agree with this (see [8]); (d) the application for disclosure was not proceeded with by the plaintiff. (e) it is alleged the second defendant has at all times complied with MAIA and the UCPR; (f) damages would still have been under $50,000 if the CLA did not apply. Legislation and rules [39] The general rule is that costs should follow the event unless the court otherwise orders (see s 681 UCPR). [40] The MAIA has some specific provisions regarding costs as follows: “51C Parties to exchange mandatory final offers if claim not settled at compulsory conference (1) If a motor vehicle accident claim is not settled at the compulsory conference, each party must (unless the court has dispensed with this obligation) exchange written final offers— (a) at the conference; or (b) if the conference has been dispensed with—within 14 days after the date of the agreement or order dispensing with the conference. (2) A written final offer required under subsection (1) is called a mandatory final offer. (3) A mandatory final offer for the upper offer limit or less is to be exclusive of costs. (4) If a mandatory final offer is for more than the lower offer limit but not more than the upper offer limit, and is accepted, costs are to be calculated and paid on a basis (but subject to limits) stated under a regulation. (5) Even though an insurer denies liability altogether, the insurer must nevertheless make a mandatory final offer but, in that event, the offer is to be expressed as an offer of $nil. -- 6 of 13 -- 7 (6) A mandatory final offer must remain open for 14 days and proceedings must not be started while the offer remains open. (7) If the claimant brings a proceeding in a court based on a motor vehicle accident claim, the claimant must, at the start of the proceeding, file at the court a sealed envelope containing a copy of the claimant's mandatory final offer. (8) The insurer must, before or at the time of filing a defence, file at the court a sealed envelope containing a copy of the insurer's mandatory final offer. (9) The court must not read the mandatory final offers until it has decided the claim. (10) However, the court must (where relevant) have regard to the mandatory final offers in making a decision about costs. (11) The court may, on application by a party, dispense with the obligation to make mandatory final offers.” “55F Costs in cases involving relatively small awards of damages (1) This section applies if a court awards an amount equal to the upper offer limit or less in damages in a proceeding based on a motor vehicle accident claim (but it does not apply to the costs of an appellate proceeding). (2) If the court awards an amount equal to the lower offer limit or less, the court must apply the following principles— (a) if the amount awarded is less than the claimant's mandatory final offer but more than the insurer's mandatory final offer, no costs are to be awarded; (b) if the amount awarded is equal to, or more than, the claimant's mandatory final offer, costs are to be awarded to the claimant on an indemnity basis as from the date on which the proceedings started (but no award is to be made for costs up to that date); (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 proceedings started (but no award is to be made for costs up to that date). (3) If the court awards more than an amount equal to the lower offer limit but not more than an amount equal to the upper offer limit in damages, the court must apply the following principles— -- 7 of 13 -- 8 (a) if the amount awarded is less than the claimant's mandatory final offer but more than the insurer's mandatory final offer, costs are to be awarded to the claimant on a standard basis up to the declared costs limit; (b) if the amount awarded is equal to, or more than, the claimant's mandatory final offer, costs are to be awarded to the claimant on the following basis— (i) costs up to the date on which the proceedings started are to be awarded on a standard basis up to the declared costs limit; (ii) costs on or after the date on which the proceedings started are to be awarded on an indemnity basis; (c) if the amount awarded is equal to, or less than, the insurer's mandatory final offer, costs are to be awarded on the following basis— (i) costs up to the date on which the proceedings started are to be awarded to the claimant on a standard basis up to the declared costs limit; (ii) costs on or after the date on which the proceedings started are to be awarded to the insurer on a standard basis. (4) Despite the limitations imposed by this section, the court may make an award of costs to compensate a party for costs resulting from a failure by another party to comply with procedural obligations under this part. (5) The court must not award costs to a party related to the introduction of evidence by the party that is unnecessarily repetitive. Example— If a claimant calls 2 or more expert witnesses from the same area of expertise to give evidence to substantially the same effect, and the claimant is entitled to costs of action under the principles laid down in this section, the court will only allow costs related to 1 of the expert witnesses. (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. (7) If an award of damages is affected by factors that were not reasonably foreseeable by a party at the time of making the -- 8 of 13 -- 9 party's mandatory final offer, the court may, if satisfied that it is just to do so, make an order for costs under subsection (2) or (3) as if the reference to a mandatory final offer in the relevant subsection were a reference to a later offer made in the light of the factors that became apparent after the parties completed the exchange of mandatory final offers. Example— Suppose that a claimant's medical condition suddenly and unexpectedly deteriorates after the date of the final offers and the court makes a much higher award of damages than would have been reasonably expected at that time. In that case, the court may ignore the mandatory final offers and award costs on the basis of later offers of settlement.” [41] As the award was less than other offers made by the second defendant also potentially relevant is s 361 UCPR which provides: “361 Costs if offer to settle by defendant (1) This rule applies if— (a) the defendant makes an offer to settle that is not accepted by the plaintiff and the plaintiff obtains a judgment that is not more favourable to the plaintiff than the offer to settle; and (b) the court is satisfied that the defendant was at all material times willing and able to carry out what was proposed in 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 and including the day of service of the offer to settle; and (b) order the plaintiff to pay the defendant's costs, calculated on the standard basis, after the day of service of the offer to settle. (3) However, if the defendant's offer to settle is served on the first day or a later day of the trial or hearing of the proceeding then, unless the court otherwise orders— (a) the plaintiff is entitled to costs on the standard basis to the opening of the court on the next day of the trial; and (b) the defendant is entitled to the defendant's costs incurred after the opening of the court on that day on the indemnity basis. (4) If the defendant makes more than 1 offer satisfying subrule (1), the first of those offers is taken to be the only offer for this rule.” [42] It seems to me that the provisions of the MAIA “trump” the provisions of the UCPR bearing in mind the specific nature of the MAIA and the fact the rules are -- 9 of 13 -- 10 subordinate legislation. By way of analogy I note the court of appeal in Sheridan v Warrina Community Co-operative Ltd & Anor [2004] QCA 308 at [39] thought the words of that statute were sufficiently clear to override any other discretion. Conclusions [43] In exercising my discretion, I have had regard to the submissions by both parties, to the material relied on and to the above sections of the MAIA. [44] In this case the following situation has arisen: (a) The court has awarded a sum less than the upper offer limit (s 55F(1))1; (b) The award is less the upper offer limit but more than the lower offer limit (s 55F(3))2; (c) The amount awarded is less than the insurer’s mandatory final offer (s 55F(3)(c)). [45] Therefore costs are to be awarded as follows: (a) Costs up to the start of the proceedings to the claimant up to the declared costs limit (s 55F (3)(c)(i))3; (b) Costs after the start of the proceedings on a standard basis to the insurer (s 55F(3)(c) (ii)). However relevantly: (a) There may be an award of costs to compensate a party because the other party failed to comply with relevant procedural obligations (s 55F(4)); (b) 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 in investigations or the gathering of evidence after the conclusion of the compulsory conference (s 55F(6)). (c) If an award of damages is affected by factors that were not reasonably foreseeable by a party at the time of making the party’s mandatory final offer then the court may have regard to later offers made when the facts were apparent (s 55F(7)). [46] In my opinion, a crucial determining factor here is that the award to the plaintiff is less than any offer made by the second defendant and the plaintiff. It is also true there was an issue on whether the CLA applied here, but of course at all material times it was clear that there was a real issue as to whether any rib injury was sustained in the motor vehicle accident. [47] At all material times the plaintiff would have had the opportunity to access to the Rockhampton hospital records, the records of Dr Cooling, the ambulance report and the nursing triage notes. It seems to me that it was entirely clear there were real issues as to whether a definitive injury to the rib area was suffered in the motor vehicle accident. The records showed clearly that there was an injury suffered on 14 1 Regulation 27A of the Motor Accident Insurance Regulations 2004 (Q) (“MAIR”) prescribes this as $50,000 at the relevant time 2 Regulation 27A of the MAIR prescribed the lower offer limit as $30,000 at the relevant time. 3 Regulation 27A of the MAIR prescribes this as $2,500.00. -- 10 of 13 -- 11 May 2010 at the workplace but not a definitive one on 17 May 2010 in the motor vehicle accident. If the plaintiff was not able to prove there was a definitive chest/rib injury on 17 May 2010, his damages were always going to be limited. The plaintiff would also have been aware that he had continued working without complaint with C & C Harris would go against his case. [48] Even if issues relating to the CLA point were not foreseeable, this would have only been relevant to general damages and the claim for care. On my findings that even if the matter had not proceeded as a CLA assessment, general damages would not have exceeded $20,000. There may also have been a claim for care, but on my judgment this would not have been for more than 5 hours per week for 12 weeks and then perhaps 3 hours per week for a further 20 weeks (at the rate of $25 per hour-a total of $3,000 without discounting) and the plaintiff would still have been well under the mandatory final offer of $55,000 plus costs (he would have received a little over $45,000). [49] Whichever way one looks at the matter the award is well under the MAIA offer and the UCPR offers made by the second defendant. [50] Having observed this, it seems to me that the plaintiff was entitled to issue proceedings in the District Court. If the court had preferred Dr Pentis’ evidence and the plaintiff’s contention that the CLA applied then the quantum of the claim may well have exceeded the jurisdiction of the Magistrates Court. [51] It also does seem to me that there were further investigations and evidence gathering by the second defendant relative to the CLA point after the compulsory conference. It also seems to me there were further investigations and evidence gathering by the second defendant relative to the rib injury point after the compulsory conference. Both matters were obvious matters at the time of the compulsory conference. Certainly my impression of the correspondence between the parties supports this conclusion. [52] In the circumstances I intend to deprive the second defendant of its costs relative to further investigations after the compulsory conference and to order it to pay the plaintiff’s costs relevant to these further investigations and gathering of evidence. [53] This is not as any punishment. But the MAIA makes it clear the parties should be ready by the time of the compulsory conference. A certificate of readiness must be signed by each party (see s 51B(6) of MAIA.) This is important so that both parties a fully apprised of each other’s cases at the relevant time. [54] As was noted in Gitsham v Suncorp Metway Insurance Ltd [2003] 2 Qd R 251 at [21], “… the intention of the legislature [is] that the parties be as fully prepared as if commencing a trial of the action when participating in a compulsory conference.” [55] The reserved costs relative to the application filed on 24 March 2014 really are part of these further investigations. It is my opinion that the plaintiff should have these costs. I have had regard to the submissions of the second defendant regarding this, but in my view, in light of the CLA issue, and the correspondence between the parties, the application was reasonably warranted. [56] Turning to the costs of the action, in the exercise of discretion applying the statutory principles, my determination is that the second defendant should pay the plaintiff’s -- 11 of 13 -- 12 costs of and incidental to the proceeding on a standard basis up to but not including 8 January 2013 on the District Court scale and not in excess of the declared costs limit of $2,500. [57] Thereafter, I order the plaintiff to pay the second defendant’s costs of and incidental to the proceeding (excluding the reserved costs) from 8 January 2013 to be assessed on the standard basis of assessment on the District Court scale (with the exception of costs relating to investigations and the gathering of evidence after the date of the compulsory conference). [58] I consider it appropriate to make an order under s 55F(4) of the MAIA as well as s 55F(6) of the MAIA. [59] I find that the certificate of readiness provided by the defendant was defective as not all investigative material required for trial had been obtained (s 51B(6)(b)). [60] I find that the defendant engaged in investigations and the gathering of evidence after the conclusion of the compulsory conference. These further enquiries were with respect to matters that were reasonably foreseeable and should have been in contemplation of the defendant at the time of the mandatory final offers. [61] From the material I have been provided this includes: (a) an investigative report from loss adjustors; (b) a statement from Kris Thorpe; (c) pay information; (d) statement of Ricky Wright; (e) correspondence regarding the CLA point; (f) the application regarding the CLA point. [62] There may be other material of which I am not aware, but this can be determined on the assessment. [63] Pursuant to s 55F(6) of the MAIA, I will exclude costs of further investigations and evidence gathering after the compulsory conference from the award of costs to the second defendant. [64] If I had been making a costs order under the UCPR I would have been inclined the order the plaintiff to pay a percentage of the second defendant’s costs. The MAIA does not in its terms seem to permit this. [65] I also consider a set off should be ordered prior to any payment to the plaintiff as it likely there will be a net amount due from the plaintiff to the second defendant as to costs. [66] The orders are as follows: 1. The second defendant pay the plaintiff’s costs of and incidental to the proceeding as agreed or assessed on a standard basis up to but not including 8 January 2013 on the District Court Court Scale and not in excess of the declared costs limit of $2,500. 2. The plaintiff is to pay the second defendant’s costs of and incidental to the proceeding from 8 January 2013 as agreed or to be assessed on the standard basis on the District Court Scale (with the exception of costs relating to investigations and the gathering of evidence after the date of the compulsory -- 12 of 13 -- 13 conference which includes the reserved costs of and incidental to the application filed on 24 March 2014). 3. The second defendant is to pay the plaintiff’s costs of and incidental to investigations and the gathering of evidence after the date of the compulsory conference which includes the reserved costs of and incidental to the application filed on 24 March 2014 as agreed or to be assessed on the standard basis on the District Court Scale. 4. The net assessed costs ordered to be paid by the plaintiff be set off against the judgment sum prior to any payment by the second defendant to the plaintiff of any part of the judgment sum. 5. Liberty to apply. -- 13 of 13 --