Britten v CPT Manager Ltd [2009] QSC 336

SUPREME COURT OF QUEENSLAND CITATION: Britten v CPT Manager Limited [2009] QSC 336 PARTIES: NICOLE CHERIE BRITTEN (Plaintiff) v CPT MANAGER LIMITED (ACN 054 494 307) (Defendant) FILE NO: S448 of 2008 DIVISION: Trial Division PROCEEDING: Hearing ORIGINATING COURT: Supreme Court Rockhampton DELIVERED ON: 23 October 2009 DELIVERED AT: Rockhampton HEARING DATE: On the Papers JUDGE: McMeekin J ORDER: The defendant to pay the plaintiff’s costs of the proceedings on the indemnity basis. CATCHWORDS: PROCEDURE – COSTS – DEPARTING FROM THE GENERAL RULE – ORDER FOR COSTS ON INDEMNITY BASIS – where unsuccessful defendant refused plaintiff’s offer of settlement prior to trial – whether the refusal was imprudent warranting an award of costs on the indemnity basis Personal Injuries Proceedings Act 2002 (Qld), s 4, s 39, s 40(8) Uniform Civil Procedure Rules 1999 (Qld) Colgate-Palmolive & Anor v Cussons Pty Ltd (1993) 46 FCR 225 Lawes v Nominal Defendant [2007] QSC 103 COUNSEL: R Morton for the plaintiff SOLICITORS: Morton & Morton Solicitors for the plaintiff Bray Lawyers for the defendant -- 1 of 5 -- 2 [1] On 23 September 2009 I delivered judgment in favour of the plaintiff in the sum of $532,685.821 but reserved the question of costs to enable the parties to make written submissions. The parties have now done so. [2] The plaintiff seeks that she be paid the costs of the proceedings assessed on the indemnity basis. The defendant concedes that an order for costs be made on the standard basis. [3] At a compulsory conference held on 20 August 2008 pursuant to the provisions of the Personal Injuries Proceedings Act 2002 (“the Act”), and prior to the commencement of the proceedings, the plaintiff offered to settle the claim pursuant to s 39 of the Act upon payment to her of $450,000 plus costs. Thus the judgement obtained was significantly more favourable to her than the terms of her offer. [4] The offer made by the plaintiff was never formalised pursuant to the Uniform Civil Procedure Rules 1999 (“UCPR”) (Chapter 9 Part 5) so that the fact that the plaintiff obtained judgment greater than her offer does not invoke application of r 360 UCPR with its assumption of a prima facie right to indemnity costs. It is well recognised that the usual order for costs is on the standard basis and that some special reason is required before costs will be awarded on the indemnity basis.2 [5] The mere making of a pre-proceedings offer by the plaintiff that is more favourable to the defendant than the eventual judgment is not necessarily sufficient to justify the awarding of indemnity costs. Byrne J so found in Lawes v Nominal Defendant [2007] QSC 103 where he held, in the context of a pre-proceedings offer made pursuant to the provisions of the Motor Accident Insurance Act 1994, that the fact that the plaintiff’s offer was more favourable to the defendant there than the eventual judgment was ‘a significant, though not decisive, consideration in the exercise of a discretion to award costs on an indemnity basis.’3 I accept that statement as correct. 1 [2009] QSC 306. 2 See Colgate –Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Smits v Tabone; Blue Coast Yeppoon Pty Ltd v Tabone [2007] QCA 337 per Cullinane J at [42]; Di Carlo v Dubois & Ors [2002] QCA 225 per White J at [36] – [40]. In Di Carlo White J remarked that ‘it is important that applications for the award of costs on the indemnity basis not be seen as too readily available ...’ (at [40]); Beach Retreat Pty Ltd v Mooloolabah Yacht Club Marina Ltd & Ors [2009] QSC 84 at [87] per Martin J. 3 At p 5 with citation of authority. -- 2 of 5 -- 3 [6] The special reason that the plaintiff points to justifying the awarding of costs on the indemnity basis, and the decisive consideration in this case, it is said, is that the failure to accept the plaintiff’s offer was imprudent or unreasonable when judged on the facts then known to the parties. As Byrne J pointed out in Lawes the assessment of the reasonableness or otherwise of a defendant’s conduct “will often involve an attempt to form a view about the relevant strength and weaknesses of the cases that ought to have been apparent to the parties when the offer was made”.4 [7] In assessing the reasonableness of the defendant’s conduct it is not irrelevant to consider the statutory context in which the plaintiff’s offer was made. Section 40(8) of the Act requires the court to have regard to the mandatory final offers made in making decision about costs “if relevant”. Section 4 of the Act states that the main purpose of the Act is to ‘assist the ongoing affordability of insurance through appropriate and sustainable awards of damages for personal injury.’ Such purpose is to be achieved by ‘providing a procedure for the speedy resolution of claims for damages for personal injury to which this Act applies; and promoting settlement of claims at an early stage wherever possible.’5 Thus an important public policy consideration reflected in the provisions of the Act is the avoidance of litigation by early settlement. To facilitate that policy the Act requires that the parties be “in all respects ready for the conference and trial” and that the legal practitioner acting so certify prior to the conference being held.6 [8] Those factors are relevant here. [9] The only significant issue between the parties at trial related to the assessment of damages for economic loss. Effectively I accepted, substantially, the defendant’s arguments in relation to all other heads of loss. [10] The defendant argues that it was not imprudent or unreasonable to refuse an offer that was some $80,000 (or about 15%) less than the eventual judgment because 4 At p 6 citing inter alia Brymount Pty Ltd v Cummins (No 2) [2005] NSWCA 69 at [11]-[14]. 5 Sub-sections 4(2)(a) and (b) of the Act. 6 See s 37 of the Act. -- 3 of 5 -- 4 there were significant matters then relevant which counted against the acceptance of the offer and merited further investigation. Those factors were said to include the plaintiff’s capacity for work, the fact that she was working at the time of the compulsory conference, and that she had left her previous employment only for reasons unconnected with the accident caused injuries and consequent incapacities. [11] The evidence relied on by the defendant for these assertions was led at trial. The plaintiff had an offer of employment at the Mater Hospital, her previous place of employment. That employment involved up to an hour and a half travel each way and 13 hour days, at a time when she also had the care of two young children. The plaintiff gave up that employment because of the distress being experienced by one of her children, a decision which I found to be not unreasonable. There was video footage of the plaintiff, lasting only a few minutes, walking around shopping centres. A Dr Burke, an occupational physician, was called to establish that the residual earning capacity of the plaintiff was significant. It became apparent under cross-examination that he had not questioned the plaintiff closely about her experiences and difficulties at work and eventually conceded that the probability of the plaintiff obtaining employment was not high. [12] The defendant argued that these various pieces of evidence demonstrated that the plaintiff’s incapacities consequent upon her injuries were far less significant than the plaintiff asserted. I found this not to be the case. The defendant had formed a substantially different view of the plaintiff’s capacity for employment than the one reflected by my findings. [13] Where one party, prior to commencement of the proceedings, assesses damages at a level later confirmed by judgement, and the other does not, there would normally need to be shown that there was a subsequent and significant change in the circumstances known to the defendant’s side to demonstrate the reasonableness of the defendant’s approach. No such change is suggested here. [14] The statutory obligation to prepare fully for the compulsory conference, and to certify that it was then ready for trial, required that the defendant make reasonable enquiries to establish the reliability of the evidence that it depended upon for its -- 4 of 5 -- 5 assessment of damages. Any such assessment should have revealed to a reasonable and experienced lawyer that the video evidence and the opinions of Dr Burke were an unreliable basis on which to proceed. I note that it was conceded by defendant’s counsel in submissions, as it had to be, that at best for the defendant’s case the plaintiff could not carry out the full range of duties involved in her work as a child carer and that she was then reduced to performing part time clerical work for which she was not trained and had no experience.7 An analysis premised on these assumptions would have justified inclusion of a significant component for economic loss. [15] Obviously the plaintiff’s offer was predicated on a substantial component being allowed for economic loss. The defendant simply did not believe the plaintiff in her claims that she was having significant difficulties in maintaining her employment and that it was unreasonable to expect her to continue to do so, at least at that level. That this analysis is justified is borne out by the defendant’s offers both prior to and in the proceedings ($170,000 and $190,000) which were not only well below the plaintiff’s offer but below its own submission at trial. The defendant’s submission that further investigations were justified runs counter to the clear requirements of the legislation that the defendant be fully prepared for conference and trial by the time it makes its decision on the plaintiff’s mandatory final offer. It is a significant factor that acceptance of the plaintiff’s offer of 20 August would have upheld the purpose of the Act, resulting in the timely resolution of the matter now before me. [16] It seems to me that the defendant’s refusal of the offer made on 20 August was unreasonable and takes this case outside the usual rule that standard costs be ordered. [17] I order that the defendant pay the plaintiff’s costs of the proceedings on the indemnity basis. 7 See [24] and [36] of the reasons for Judgment -- 5 of 5 --