DISTRICT COURT OF QUEENSLAND
CITATION:
O’Brien v Merton & Anor (No.2) [2020] QDC 320
PARTIES:
IMOGEN SKYE O’BRIEN
(plaintiff)
v
LEANNE EDNA MERTON
(first defendant)
and
ALLIANZ AUSTRALIA INSURANCE LIMITED
(ABN 15 000 122 850)
(second defendant)FILE NO:
SD304/2019
DIVISION:
Civil
PROCEEDING:
Costs Application
ORIGINATING COURT:
Southport District Court
DELIVERED ON:
11 December 2020
DELIVERED AT:
Southport
HEARING DATES:
1 to 2 October 2020
JUDGE:
Kent QC, DCJ
ORDER:
No costs are to be awarded.
CATCHWORDS:
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL MATTERS – POWER TO AWARD GENERALLY – STATUTORY BASIS GENERALLY – where the plaintiff was awarded $41,560.00 in damages after a trial arising out of a motor vehicle accident – where the parties were heard as to costs – where the judgment amount was less than the lower limit of $44,070.00 pursuant to s 27 of the Motor Accident Insurance Regulation 2018, less than the plaintiff’s mandatory final offer but more than the insurer’s mandatory final offer – where the judgment amount was more than the defendant’s formal offer under the Uniform Civil Procedure Rules 1999 – whether the court should award indemnity costs to the plaintiff from the date of the formal offer – whether the court should order that no costs be awarded, because the judgment is less than the lower offer limit of $44,070.00 pursuant to s 27 of the Motor Accident Insurance Regulation 2018, and is less than the claimant’s mandatory final offer but more than the insurer’s mandatory final offer (thus, s 55F(2)(a) of the Act is engaged).
LEGISLATION:
Motor Accident Insurance Act 1994, s 4, 51A, 55F
Uniform Civil Procedure Rules 1999, r 5, 353, 355, 360
Motor Accident Insurance Regulation 2018, s 27
Motor Insurance Amendment Bill [2000]CASES:
Clapham v Butler& Anor(No.2) [2016] QDC 286
Kenny & Anor v Eyears & Anor [2004] QSC 059
Lindsay v Aumaalii & Anor [2004] QDC 028
Windon v Edwards & Anor [2005] QDC 029
Ward v Coomber [2005] QDC 251
Monement v Faux & Anor [2005] QSC 342
Nichols v Curtis and QBE Insurance (Australia) Limited [2010] QDC 34
Ballandis v Swebbs & Anor (No.2) QDC 143COUNSEL: A Harris for the plaintiff
M D Holmes for the defendantsSOLICITORS: Southern Gold Coast Lawyers for the plaintiff
McInnes Wilson Lawyers for the defendants
Introduction
I delivered judgment in this action on 6 November 2020 and indicated that judgment would be given in favour of the plaintiff against the defendants for $41,560 and that I would hear the parties as to costs. Written submissions were subsequently filed.
The plaintiff submits that the relevant background includes a compulsory settlement conference pursuant to s 51A of the Motor Accident Insurance Act 1994 which took place on 21 October 2019. The matter did not resolve but pursuant to the Act mandatory final offers were exchanged. The plaintiff offered to accept $80,000 plus standard costs and the defendants offered to pay $20,000 all inclusive.
Obviously the amount awarded at trial was between these two amounts. However, later, on 27 November 2019, the defendants served a formal offer on the plaintiff to settle her claim in the sum of $20,000 all inclusive, pursuant to r 353 of the Uniform Civil Procedure Rules 1999 (“UCPR”). Subsequently on 11 September 2020 the plaintiff served on the defendants a formal offer pursuant to the UCPR to settle her claim in the sum of $30,000 all inclusive. None of the offers were accepted.
The plaintiff thus submits that the court should order the defendants to pay her costs from 11 September 2020 on the indemnity basis, having achieved a better result than the formal offer under the Rules. I pause to note that, pursuant to UCPR r 355(1) the offer, in order to comply with the rules, must specify a period of not less than 14 days after the day of service during which it remains open for acceptance. Nonetheless, it does seem open, as the plaintiff contends, that pursuant to r 360 the order may take effect from the date of service of the offer rather than the date of its expiry.
It is certainly correct that the plaintiff obtained an order no less favourable than her former offer of settlement of 11 September.
Importantly, the plaintiff argues that r 360 should prevail over s 55F of the Motor Accident Insurance Act (“the Act”) because the philosophy of the UCPR (see r 5) is to facilitate the just and expeditious resolution of claims whilst also avoiding undue expense. Moreover, it is argued that had the legislature intended the UCPR to be subordinate to the provisions of s 55F, this would have been expressly noted in r 360.
The plaintiff submits that in Clapham v Butler& Anor(No.2)[1], Andrews SC DCJ was called upon to determine whether there was a conflict between the costs provisions of the Act and the UCPR. Ultimately the plaintiff was ordered to pay the defendants’ standard costs as the judgment was less favourable than the defendants’ mandatory final offer. The plaintiff argues that the costs provisions are in conflict but that r 360 should prevail. In fact, in Clapham his Honour declined to decide whether there was a conflict between the section and the UCPR; see [17]. In that case the amount awarded was below the defendant’s mandatory final offer and its UCPR offer.
[1][2016] QDC 286
I also note that although, as his Honour said (at [15]) the UCPR came into operation about five years after the MAIA, in fact s 55F was not inserted until 2000[2], after the UCPR. Thus Parliament inserted the s 55F scheme after the UCPR was in force, and it is a scheme which appears on its face to be both mandatory and specific.
[2]Motor Accident Insurance Act Amendment Act 2000; commenced 1 October 2000
Second defendant’s submissions
The second defendant advanced submissions on costs, essentially, as I understand it, in respect of both defendants. It is pointed out that the judgment is less than the lower offer limit of $44,070 pursuant to s 27 of the Motor Accident Insurance Regulation 2018, falling as the accident does in the date range of 1 July 2017 to 30 June 2018. This amount is therefore the defined “lower offer limit” pursuant to s 4 of the Act, and thus s 55F is engaged. Pursuant to s 55F(2), the matter falls within the principles in ss (a) where the amount awarded is less than the claimant’s mandatory final offer but more than the insurer’s mandatory final offer, thus no costs are to be awarded.
The second defendant’s submissions agree on the amount of the mandatory final offers which were exchanged on 21 October 2019 and on the formal offers pursuant to the rules. As identified by the second defendant, the issue is whether the court should have regard to the plaintiff’s UCPR offer when deciding the issue of costs.
The second defendant refers to Kenny & Anor v Eyears & Anor[3]. In that case the defendant had made a mandatory final offer higher than the judgment in favour of the plaintiff. At para [11] of the judgment, Philippides J observed that s 55F prescribes a comprehensive regime for awarding costs in awards of $50,000 and under. It does not seek to mandate in a similar way the costs consequences for awards of more than $50,000 and thus did not dictate the result in that case. Nevertheless, in para [12] her Honour continued that the existence of the mandatory final offer which was more favourable to the first plaintiff in the judgment was relevant to the general exercise of discretion.
[3][2004] QSC 059
The second defendant also refers to Lindsay v Aumaalii & Anor[4] at [5] in relation to s 55F noting:
“…Its effect is to restrict the discretion as to costs which the court otherwise would have under the ordinary law, so that in certain circumstances orders for costs either cannot be made or can only be made in the terms specified by the section.”
[4][2004] QDC 028
The second defendant also refers to similar commentary by Judge Robin QC in Windon v Edwards & Anor[5], to the effect that the intention of section 55F is to deprive the courts of a discretion and the purpose is to punish those who do not make or accept appropriate offers.
[5][2005] QDC 029
The second defendant next refers to Ward v Coomber[6] where Dodds DCJ dealt with the situation where the judgment was between the two mandatory final offers, although in that case the matter fell within s 55F(3), rather than (2). Subsection (3) deals with a position where the award was more than the lower offer limit but not more than the upper offer limit. However his Honour made the observation that s 55F(3) is mandatory in its terms and the only discretion is introduced by ss (7), dealing with factors that were not reasonably foreseeable at the time of a mandatory final offer, which his Honour considered did not apply.
[6][2005] QDC 251
The second defendant next refers to Monement v Faux & Anor[7]. In that case Douglas J gave judgment for the plaintiff for $392,708.04 and took into account the second defendant’s mandatory final offer of $400,000 plus costs, although this clearly did not fall within s 55F. His Honour took into account s 51C(10) which provides that the court must (where relevant) have regard to the mandatory final offers in making a decision about costs. This was something which had not been applied by Justice Philippides in Kenny.
[7][2005] QSC 342
The second defendant also refers to Nichols v Curtis and QBE Insurance (Australia) Limited[8] where Judge Andrews SC gave judgment for the plaintiff in an amount which was between the two mandatory final offers. There had subsequently been a number of UCPR formal offers including an offer by the defendant which was more favourable than the final judgment. The second defendant therefore sought an order that the plaintiff pay its costs in reliance of the UCPR offer and on the basis that the award of damages was affected by factors which were not reasonably foreseeable to it when it made its mandatory final offer. His Honour did not consider that the test in s 55F(7) was engaged. In his Honour’s view the relevant factors were reasonably foreseeable from a reading of the expert opinions and he was thus obliged to award costs to the plaintiff on the standard basis in the maximum sum of $2,500. It was a case where s 55F(3)(a) of the Act applied. The plaintiff had not achieved a result better than a UCPR offer, whereas the second defendant’s latest UCPR offer was more favourable than the judgment. There does not seem to have been a particular reliance on the UCPR offer by the second defendant overcoming the application of s 55F.
[8][2010] QDC 99
Most relevantly, the second defendant refers to Ballandis v Swebbs & Anor (No.2)[9] where Judge Smith gave judgment for the plaintiff in the sum of $32,971.24. The second defendant had made a mandatory final offer of $55,000 plus standard costs and the second defendant had made a UCPR offer of $75,000 plus standard costs after the commencement of court proceedings. At [42] His Honour said:
“[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 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.”
[9][2014] QDC 143
His Honour in that case does not seem to have been dealing with exactly the same position as the present case, where the award does not exceed the lower offer limit, but it does exceed the amount of the plaintiff’s UCPR offer. Thus his Honour’s observations that the provisions of the Act “trump” the provisions of the UCPR, may have been obiter dicta. Nonetheless, they are, with respect, apposite and consistent with the observations of Judge Robin in Windon; Judge Dodds in Ward v Coomber and Judge Andrews SC in Nichols v Curtis as to the legislation being expressed in mandatory terms.
Thus the second defendant submits that the statutory enactment of the MAIA takes precedence over the subordinate legislation of the UCPR.
The second defendant also refers to the quote from Philippides J in Kenny [supra] at para [6] where her Honour referred to the second reading speech of the Motor Insurance Amendment Bill [2000], to the effect that before the claimant brings an action in court for damages for personal injury from a motor vehicle accident there must be a compulsory conference of the parties. The advantages are that a compulsory conference provides a chance to negotiate meaningfully for an early resolution of the claim and reduces legal costs where the claim settles as a result of the process. A conference may be initiated by either party and can be used to incorporate costs penalties where a claim does not settle.
The quote continues that failure to settle at a compulsory conference requires each party to exchange mandatory final offers, which remain open for 14 days. If the matter proceeds to court, each party must submit its mandatory final offer to the court in a sealed envelope. The court must not read the offers until it has decided the claim and then must have regard to the offers in making a decision about costs.
This is consistent with the wording of s 55F(2) where it is specified that in the circumstances the court must apply the following principles. As noted above, the introduction of s 55F is later in time than the UCPR, which commenced in 1999.
The second defendant submits that the purposes of the exchange of mandatory final offers is to discourage litigation in circumstances where there are modest claims for damages, and s 55F(2)(a) is expressed in mandatory terms. This seems to be the approach followed in a number of the authorities as outlined above.
The second defendant submits that there has been no material change in the plaintiff’s case since the compulsory conference, and I do not really understand the plaintiff to be arguing otherwise. Rather, the plaintiff’s argument relies on the later UCPR offer taking precedence over (‘trumping’ to use Judge Smith’s term) the provisions of s 55F.
In my view the analysis of the second defendant, based on the reasoning and authorities outlined above, should be accepted. The legislation, which is later, specific to the situation and in mandatory terms, should take precedence over the earlier, more general subordinate legislation. The result is that the plaintiff’s situation is covered by s 55F(2)(a) and no costs are to be awarded.