Cox v Doig & Ors (No 2) [2012] QDC 147

DISTRICT COURT OF QUEENSLAND CITATION: Cox v Doig & Ors (No 2) [2012] QDC 147 PARTIES: DAVID COX (Plaintiff) v LINDSAY DOIG (First Defendant) and ARTHUR FRY (Second Defendant) and FRANK SCHUFFELEN (Third Defendant) and TERRY HEAD (Fourth Defendant) and TONY WEIR (Fifth Defendant) FILE NO/S: D83/05 DIVISION: Civil PROCEEDING: Application for costs ORIGINATING COURT: Maroochydore District Court DELIVERED ON: 18 June 2012 DELIVERED AT: Maroochydore District Court HEARING DATE: On papers in accordance with Order made 13 April 2012 Submission received from defendants on 4 May 2012; no submissions received from plaintiff JUDGE: J.M Robertson DCJ ORDER: I order the plaintiff to pay the costs of the proceedings of all defendants to be assessed on the indemnity basis CATCHWORDS: COSTS –where defendants successfully applied to strike out -- 1 of 14 -- 2 Claim and Statement of Claim for want of prosecution – where successful defendants seek costs on the indemnity basis – where plaintiff wilfully ignored the known facts and law which rendered his case almost hopeless – where plaintiff deliberately and imprudently refused to accept offers of settlement – whether usual order for costs to be assessed on the standard basis should be departed from in the circumstances of the case. Legislation Uniform Civil Procedure Rules 1999 (Qld) Cases Calderbank v Calderbank [1975] 2 All ER 333 Colgate-Palmolive Company & Anor v Cussons Pty Ltd (1993) 46 FCR 225 Di Carlo v Dubois & Ors [2002] QCA 225 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 COUNSEL: Plaintiff self-represented Mr Carter solicitor for all defendants SOLICITORS: Gadens Lawyers for all defendants [1] On 13 April 2012 for reasons published that day I ordered that the plaintiff‟s claim and statement of claim filed on 18 March 2005 be struck out for want of prosecution. Leave was given to the successful defendants to make a written submission as to costs by 4 May 2012 which they did. The plaintiff was given two weeks to respond, that is by 18 May 2012 which he did not. On 22 May 2012 he filed an affidavit which purported to explain his failure to respond and seeking an extension until 19 June 2012. I permitted him further time until 8 June 2012 to respond and the defendants until 13 June to respond if advised. This was conveyed to the parties by email from my Associate. As a consequence the decision date set -- 2 of 14 -- 3 on 13 April 2012 was moved forward to 18 June 2012. The plaintiff has failed to file any submission in relation to the issue of costs. [2] Clearly the defendants are entitled to their costs as their application has been completely successful. They apply however for costs to be assessed on the indemnity basis and this is the primary focus of these reasons. [3] The plaintiff has appealed the decision given on 13 April 2012. Given the history of the matter and the timetable set on that date in relation to the costs issue; there is no suggestion that this Court is not empowered to make a costs order pending the appeal. In any event, the plaintiff will not be in any jeopardy of having as it were to appeal twice, because he can if he wished amend his present appeal grounds to add any complaint he has about the costs orders I intend to make. The Law [4] There is no doubt that the court has power to order that costs be assessed on the indemnity basis: rule 703 Uniform Civil Procedure Rules 1999 (Qld) („UCPR‟). The most frequently cited and accepted authority establishing the relevant principles in awarding indemnity costs is the judgment of Sheppard J in Colgate-Palmolive Company & Anor v Cussons Pty Ltd [1993] FCA 536, (1993) 46 FCR 225. At that time there did not appear in the various rules of court a clear statement of principle that in certain circumstances a successful party was entitled to be fully indemnified for its costs reasonably incurred. To obtain such an order recourse had to be made to the common law. I am sure that it is still the case that an order for costs to be assessed on the standard basis (once referred to as party and party costs), means that a successful party receives much less than a full indemnity for costs reasonably incurred, unless it is favoured with an order that costs be assessed on the indemnity basis, formerly referred to as solicitor/own client costs, but in reality a different species of order. His Honour discussed a number of previous decisions of which there were many and then (at [24]) extrapolated a number of principles or guidelines which may arise in the particular circumstances of the case. [5] Colgate-Palmolive and another decision referred to in that judgment by Sheppard J; that of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, have been recognised as correctly -- 3 of 14 -- 4 stating the law in many decisions of the Queensland Court of Appeal. Such a decision is Di Carlo v Dubois & Ors [2002] QCA 225. In that case White J (as her Honour then was) (with whom Williams JA and Wilson J agreed) referred to Fountain Selected Meats and Colgate-Palmolive and in particular noted a comment by Gummow J (as his Honour then was) in the New South Wales Court of Appeal in Rosniac v Government Insurance Office (1997) 41 NSW LR 608 noted at 616 to the effect that the discretion to depart from the usual party and party basis for costs is not confined to what Gummow J described as the “ethically or morally delinquent party”. It is clear from the authorities that the discretion to award indemnity costs is enlivened in a minority of cases and that the usual order is that costs be awarded on the standard basis. Relevantly for the purposes of this case the principles enunciated by Sheppard J in Colgate-Palmolive relied upon by the defendants are those set out in rules 2, 5 and 6, at paragraph [24] of his Honour‟s judgment. Of particular relevance is the reference in rule 5 to circumstances in which proceedings were commenced or continued in wilful disregard of known facts or clearly established law; or involved an imprudent refusal of an offer to compromise which may constitute circumstances in which the discretion is enlivened. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on the standard basis. [6] As his Honour noted in para 24 rule 6: “It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.” -- 4 of 14 -- 5 The particular circumstances of this case [7] In this case I am satisfied that the plaintiff proceeded with his claim in wilful disregard of the known facts and law which in my opinion rendered his case hopeless, and imprudently rejected a number of offers made by Mr Carter on behalf of the four defendants and an offer made on behalf of the fifth defendant by his then solicitor. [8] In my reasons published on 13 April 2012, I explained why the plaintiff never had any realistic prospects of successfully overcoming the defence of qualified privilege raised by all defendants. At para [24] I refer to a letter from Mr Carter to the plaintiff‟s solicitors dated 12 January 2005 which at that early stage put the plaintiff on notice that irrespective of issues of truth and defamatory imputation, this was a very clear case of qualified privilege and no evidence of malice or lack of good faith could be produced. In my judgment at para [25] I referred to the reply from the plaintiff‟s solicitors (which I incorrectly said was 30 January – it was 13 January 2005), and I described it, charitably on reflection, as “strident”. The letter (relevantly) is in the following terms: “The purported defence of your clients‟ actions is insulting. You have referred us, and at length and in rote, to passages from the Defamation Act which have no relevance to this matter at all. Where, for example, has it been said that Mr Cox has defamed any of your clients and that to publish their various opinions could possibly have been made responsive to any such attack? Further, on what occasion did Mr Cox issue the invitation or a challenge apparently relied upon? Regrettably, such unsubstantiated attacks on Mr Cox and irrelevant justifications demonstrate that your clients could have no reasonable belief in the defamatory matter being spread by them and are merely seeking to support their actions with a smokescreen. The matters about which Mr Cox has complained go beyond the circulation of email correspondence between committee members. Of significant concern is the draft minutes of the meeting of 4 December 2004. Those minutes include plainly irrelevant and -- 5 of 14 -- 6 inflammatory comments made against Mr Cox. What interest could any of the owners of units in the complex have, for example, in being told that some (unnamed) members of the committee saw Mr Cox‟s opposition to the request to take the meeting „as a reluctance … to be held accountable for matters discussed or agreed at the meeting‟. Aside from the fact that it is an unreasonable opinion to hold merely because of an opposition to the recording of the meeting it is not a matter that the unit holders have an interest in knowing. The function of the minutes is to convey important and relevant information about the determinations of the committee, not propaganda. The draft minutes are littered with similar comments. In the purported record of a discussion about gym equipment it is expressed as a matter of fact that Mr Cox‟s action in replacing certain equipment perpetuated „a long history of action without consultation‟. The reader is not given any information which would assist in understanding what that „long history‟ was but more importantly, has no interest in being told of the limited opinions of unnamed committee members. Furthermore, it is not correct to assert that your clients have only expressed their opinions to persons who have a genuine interest in them. Their views have consistently been expressed to representatives of North Coast Body Corporate Management Services. That organisation has no interest in the politics of the committee. All of the qualified privileges relied upon by your clients will be defeated by an absence of good faith. Your correspondence only strengthens Mr Cox‟s claim and your clients‟ actions are beyond that which is reasonably acceptable.” [9] As Mr Carter notes in his submission no explanation was provided as to how the plaintiff would establish an absence of good faith on the part of the defendants. -- 6 of 14 -- 7 [10] On 17 January 2005 Mr Carter replied. Relevantly the response on behalf of the first four defendants‟ states: “I consider your correspondence to be inflammatory and provocative in its terms, and, at least in part, inaccurate. Rather than run the risk of further inflaming the debate by specifically addressing each and every item in the correspondence, I propose to simply re-state my clients‟ position, which I believe was adequately set out in my letter of 12 January 2005. My clients refute any suggestion that they have done or said anything which would give rise to an actionable right in defamation against them on behalf of Mr Cox. They also state categorically that they have no intention whatsoever of defaming Mr Cox at any time in the future. My clients admit that they hold concerns about certain aspects of Mr Cox‟s performance as chairman of the Grand Pacific Resort Body Corporate. They assert that any concerns which they have raised are genuine concerns based on the information available to them. They assert that in a number of respects Mr Cox has failed to provide any or any sufficient response to their concerns. They further assert that any concerns that they have have only been raised in an appropriate forum and with people who have a specific interest in those concerns and the management of the Grand Pacific Resort Body Corporate (which does include the body corporate managers since they have to deal with some of those issues). They never have had, and do not presently have, any intention whatsoever of publishing in any way whatsoever any concerns which they might have with respect to Mr Cox‟s performance as chairman -- 7 of 14 -- 8 of the Grand Pacific Resort Body Corporate to anyone who does not have a specific interest in the management of the Grand Pacific Resort Body Corporate.” [11] The letter again expressed the view on behalf of the first four defendants that an EGM of the body corporate should be convened in an attempt to resolve the issues between the parties. The letter specifically concluded with the following statement: “In the meantime, I have instructions to accept service of any defamation proceedings on behalf of my clients. I am sure however that you and your client are aware of the decision in Flower & Hart „a firm‟ White Industries (Qld) Pty Ltd [1999] FCA 773. My clients reserve the right to rely on this correspondence and my earlier correspondence in relation to any issue as to costs associated with any proceedings.” [12] As I have noted in my reasons for judgment delivered on 13 April 2012, proceedings were not issued until 18 March 2005, approximately a month after the EGM on 19 February 2005 at which it was resolved that the plaintiff be removed from the body corporate committee effective immediately. [13] By letter dated 5 April 2005 Mr Carter on behalf of the first four defendants made an offer to settle the proceedings pursuant to part 5 of chapter 9 of the UCPR (as amended). Essentially the offer was to the effect that his clients would settle the proceedings on the basis that each party be responsible for its own legal costs and outlays and that each party sign all documents and do all things necessary to formalise the discontinuance of the proceedings, and that the settlement be a full and final settlement of all matters and claims arising out of or incidental to the matters the subject of the proceedings issued by the plaintiff. The offer was stated to remain open for a period of 14 days. Again Mr Carter went into considerable detail about the difficulties confronting the plaintiff in overcoming the defence of qualified privilege. To some extent this involved a restatement of his contentions in previous correspondence referred to above. -- 8 of 14 -- 9 [14] By letter dated 26 April 2005 and marked “without prejudice”, Mahons Lawyers on behalf of the fifth defendant offered to settle the plaintiff‟s claim against the fifth defendant on the basis of a formal letter to the plaintiff in the following terms: “On 21 October I wrote a letter to the body corporate committee of the Grand Pacific Resort. In the letter I was highly critical of Mr David Cox and the way he carried out his functions as chairman of the body corporate. I offer to Mr Cox my unreserved apology for, and complete retraction of, the contents of the correspondence. Furthermore, if the contents of my correspondence have caused Mr Cox significant hurt and harm including harm that was ongoing at the date of the recent extraordinary general meeting then I once again apologise.” [15] That offer was ultimately rejected by the plaintiff by letter from the plaintiff‟s solicitors dated 24 March 2006. The plaintiff‟s solicitors advised the then solicitors for the fifth defendant as follows: “We regret to advise that our client does not accept that your client independently produced the allegations contained in your client‟s letter in issue. Our client was deeply offended by the 21 October 2004 letter and the inflammatory address to the Extraordinary General Meeting on 19 February 2005 after your client‟s purported apology. Our client does not accept that apology which did not comply with out client‟s demand in that regard. For these reasons our client‟s instructions are that he will not release your client from the proceedings and that your client is to file his defence forthwith.” [16] The fifth defendant‟s defence was filed on 26 April 2006 and raised the defence of qualified privilege. The plaintiff‟s reply to that defence dated 3 May 2007 denies that the defamatory material was published in good faith but does not provide any particulars of any allegation of absence of good faith. -- 9 of 14 -- 10 [17] The question of how the plaintiff proposed to deal with the defence of qualified privilege was again raised in correspondence from Mr Carter to the plaintiff‟s solicitors on 11 January 2007. Relevantly the letter states: “My clients‟ concern is, and always has been (as set out in my letter of 30 November 2005), that in fact your client‟s position has not changed at all. It is precisely because of that that I indicated in my letter of 30 November 2005 that my clients had no expectation that a mediation would serve any useful purpose at all. Since then your client has apparently informed various unit owners at Grand Pacific Resort that my clients have refused to attend a mediation (which is incorrect). What my clients in fact did as set out in my letter of 30 November 2005 was to express their concern that your client was not prepared to compromise at all and on the basis of that concern my clients suggested that before a full mediation occurred your client should spell out a settlement proposal which would be a reasonable indicator of your client‟s intentions and whether or not any further negotiations were worthwhile. My clients‟ concern has been borne out by the statements made by Mr Cox to other unit owners and by the statements made in your letter of 2 December 2005 to the effect that „our client‟s position has been made quite clear in his pleading to date‟. I refer you again to my earlier correspondence and in particular to my letters of 12 January 2005, 17 January 2005 and 5 April 2005. My clients went to considerable trouble, and expense, to set out their position quite clearly and to explain their position. Proceedings were issued by Mr Cox, or on behalf of Mr Cox, without any attempt to address the issues which had been raised and/or to explain how Mr Cox‟s claim is sustainable as a matter of law. My clients had a genuine concern about the way the Grand Pacific Resort Body Corporate was being run under Mr Cox. Even now there is no evidence that Mr Cox has ever addressed the concerns -- 10 of 14 -- 11 raised. Those concerns were raised with him in the first instance and when no appropriate, or any, response was forthcoming those concerns were raised with the unit holders. There was no other option available to the defendants. Mr Cox held a position to which he was elected by the unit owners. He was elected as a representative of the unit owners, and was accountable to the unit owners. Proper procedures were followed to convene an extraordinary general meeting to let the unit owners decide how they wanted the Grand Pacific Resort Body Corporate to be managed. Mr Cox had every opportunity to put his point of view forward and did in fact campaign for votes. He lost a duly convened and properly conducted election. On the pleadings as they stand there is no evidence that any allegation of any kind, let alone any defamatory allegation, was published outside the ambit of unit owners who had a specific interest in the issue and those responsible for management of the body corporate, who also had a specific interest in the issue. Quite apart from the publication issue there is not even any attempt in the pleadings or anywhere else by Mr Cox to suggest that the concerns which were initially raised directly with him could not reasonably have been held or were simply ill founded or not based in fact. I have already acknowledged that my clients are both conscious of the costs that will be incurred by all parties if the matter proceeds to trial and of the fact that a public hearing with both examination and cross-examination will not necessarily be a pleasant experience. Unless and until your client can demonstrate by reference to a legal precedent and specific facts (not generalised statements) that he actually has a valid response to the contention that there was no publication that went beyond what was justified and that the defendants had genuine concerns about the management of the -- 11 of 14 -- 12 Grand Pacific Resort Body Corporate which concerns had been expressed to your client directly without any or any proper response, the only advice that I can give to my clients is that Mr Cox‟s claim will fail. In that context and in the context of an assertion by Mr Cox that he will not accept anything less than $150,000 plus costs in settlement of his claim, an amount which in excess of any award which Mr Cox could reasonably expect to recover even if he were successful, it is perhaps not surprising that the defendants should take the view that they have genuine concerns about the prospects of a mediation being successful.” [18] The letter further stated: “The other option, as I have already stated previously, would be for Mr Cox to provide a specific explanation of how he proposes to overcome the issues which seem to, from a legal point of view, make his claim almost impossible to sustain, and/or put forward a proposal which is realistic in terms of being an attempt to achieve a compromise, which my clients can then respond to. I can assure you that my clients certainly have an open mind if there is specific authority or specific facts which demonstrate that their perception is misconstrued. So far however no such specific authority or specific facts have been referred to and a bold assertion of defamation without addressing the specific issues raised is unconvincing.” [19] Similar issues were raised by Mr Carter in a letter to the plaintiff‟s solicitors dated 31 January 2007. On or about 10 May 2007 solicitors on behalf of the fifth defendant sought further and better particulars of the facts relied upon by the plaintiff to assert lack of good faith on behalf of the fifth defendant. The response by the plaintiff‟s solicitors dated 29 May 2007 sought to argue that no particulars were necessary. When challenged the plaintiff‟s solicitors then purported to respond to the request for further and better particulars on behalf of the fifth defendant by a reply dated 18 June 2007. That pleading really amounts to an assertion on behalf of the plaintiff that the fifth defendant sought improperly to cause committee members and/or unit holders to not vote with the plaintiff on -- 12 of 14 -- 13 contested matters but that in fact there was no objective basis in the plaintiff‟s reply to warrant such an assertion nor has he referred to any objective facts since that time. [20] A similar attempt by Mr Carter to obtain further and better particulars resulted in replies which set out a chronology of events relevant from the perspective of the plaintiff but do not explain how those events amount to evidence of lack of good faith on the part of any of the defendants. [21] By letter dated 3 March 2009 the plaintiff‟s solicitors advised Gadens lawyers that: “As part of the process of seeking advice in respect of the fifth defendant‟s queries we will also raise your query concerning the sufficiency of evidence in respect of your client‟s malice. Once we are in receipt of that advice, and our client‟s instructions, we will revert to you either with further particulars or our client‟s intent to make application to dispense with your clients‟ consent to list the matter for trial. In either event we‟ll provide notice of our intentions.” [22] By letter dated 30 March 2010 the plaintiff‟s solicitors advised Gadens lawyers that the plaintiff was unwell and had been certified as unfit to proceed further with a claim at that time. In response by letter dated 31 March 2010 Mr Carter on behalf of the first four defendants advised the plaintiff‟s solicitors that: “It is a matter for your client as to what steps he now takes but the fact remains that his claims appear to be without any legal substance whatsoever and he has not complied with his obligations in relation to the diligent prosecution of the claim.” Conclusions [23] In my view the plaintiff‟s conduct throughout the course of the proceedings has remained consistently aggressive both in terms of a language adopted both by the plaintiff in his dealing with the defendants and in relation to the EGM and in terms of a steadfast refusal to modify his approach or properly address the issue of -- 13 of 14 -- 14 absence of good faith. That refusal is in the context of a case in which it has been consistently made clear that in this regard the plaintiff‟s chances of success were very low indeed. The correspondence from Mr Carter on behalf of the first four defendants in this regard commenced prior to the institution of proceedings. [24] The offers to settle made on behalf of the first four defendants were refused presumably deliberately by the plaintiff. The plaintiff‟s unwillingness to accept the offer in the circumstances where he should have been aware of the substantial difficulties in overcoming the onus upon him is relevant to the exercise of discretion. Although the offer to settle made on behalf of the fifth defendant was not an offer made pursuant to the UCPR it is a relevant offer to the exercise of the discretion here within the meaning of Calderbank v Calderbank [1975] 2 All ER 333. The failure to accept the offer made on behalf of the fifth defendant is correctly characterised as even more imprudent than his refusal to accept the offer made on behalf of the first four defendants. In my view this is a clear case in which departure from the usual rule is clearly warranted and I order the plaintiff to pay the defendants‟ costs of and incidental to the claim and application to be assessed on the indemnity basis. -- 14 of 14 --