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[2003] QSC 424
plaintiff. Orders: (1) Defendants to pay plaintiff's costs of and incidental to the action to be assessed on the standard basis applicable to an action in the District Court where the amount recovered is...
The plaintiff won judgment against three defendants for building defects. Before trial, defendants made settlement offers: a joint $50,000 offer by the first and third defendants, and a $25,000 plus vaguely‑described costs offer by the second. The court held the joint offer inadequate because the amount recovered against the first defendant exceeded that offer. The second defendant's offer was too uncertain about costs to be compared with the judgment plus appropriate costs, and could not operate as a formal UCPR offer because of timing. Consequently, the offers did not displace the usual costs order. The defendants must pay the plaintiff's costs on the standard District Court basis for the $69,529 judgment, with limited costs to defendants for one adjourned hearing date and an indemnity apportionment between defendants (see [1]–[12]).
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Brian Geaney Pty Ltd sued three defendants (Close Constructions Pty Ltd, Paul Cruice Architect Pty Ltd, and Cyril Caswell) in relation to building defects. The trial was conducted in the Supreme Court at Rockhampton over multiple sessions. On 21 November 2003 the Court (Dutney J) gave judgment for the plaintiff: $18,000 against all three defendants and an additional $51,529 against the first defendant (Close Constructions), a total recovery of $69,529 (see [1]). After judgment the parties made submissions on costs, inviting consideration of several pre‑trial settlement offers.
There were two relevant offers before trial:
The judge was required to decide whether these offers displaced the ordinary costs entitlement of the successful plaintiff and, if so, whether any defendant was entitled to standard costs from the date of their offer under the UCPR. The court addressed issues of joint offers, Calderbank offers, the operation of the UCPR, and the intractability of apportioning costs where evidence and issues were interwoven (see [2], [4]–[11]).
Ultimately, Dutney J ordered that the defendants pay the plaintiff's costs on the standard basis applicable to a District Court action for $69,529 (the total recovered) (see [11]). The plaintiff was also ordered to pay the defendants' reserved costs for the adjourned hearing on 16 June 2003. Between defendants, apportionment and indemnity directions were given: liability as between the defendants for the sum obtained was apportioned 20% (first), 40% (second), 40% (third), and the second defendant was entitled to indemnity from the first and third for costs it paid beyond 40% (see [12]).
Three interlocking reasons led to the court's outcome.
The joint offer could not fairly be equated to the recovery against a single defendant (see [4]). The 28 June 2002 offer was made jointly by the first and third defendants and required discharge of both. Because the amount recovered against the first defendant alone exceeded that joint figure substantially, the court held that the joint offer did not displace the plaintiff's ordinary costs entitlement (see [4]). The logic is practical: a plaintiff who could obtain more against one defendant post‑trial should not be deprived of ordinary costs because of a joint offer that required quitting claims against both defendants.
The second defendant's offer was too uncertain in its costs component to be quantified and compared with the ultimate recovery (see [5]–[10]). The second defendant offered $25,000 plus "some costs" or alternatively the actual cost of certain remedial works (articulation and shrinkage joints and rectification of cosmetic damage). Dutney J analysed the offer: the costs element was expressed as "the appropriate scale" (presumed Magistrates' Court scale) but then allocated in a way dependent on identifying items of costs specific to particular allegations and to apportioning shared costs by a proportion, a method which the court found impracticable because the evidence on defects and the engineers' reports were inextricably linked across several issues and defendants (see [5]–[7]). Given that uncertainty, the court could not confidently value the offer against the judgment plus a realistic costs order (see [9]–[10]).
The legal status of the offer was not that of a formal UCPR Part 9 offer (see [8]). That matters because formal offers under Chapter 9 Part 5 of the UCPR have a clear consequence: if the plaintiff's recovery is less favourable than such an offer, the maker can obtain standard costs from the date of the offer. The second defendant's offer could not operate as a UCPR offer because the offer closed less than 14 days after it was made (see [8]). The judge also expressed a principled view: while Calderbank offers remain powerful discretionary considerations, they should not normally secure a more favourable outcome for their maker than what a properly timed and framed UCPR offer would have produced (see [8]). This comparative remark guided the court away from treating the imperfect Calderbank offer as producing exceptional costs relief.
Because of the above, the judge concluded that neither the joint $50,000 offer nor the $25,000 plus uncertain costs Calderbank offer displaced the usual costs order: defendants must pay the plaintiff's costs on the standard District Court scale applicable to a $69,529 judgment (see [11]).
Before this judgment:
What this judgment adds:
After the judgment:
"[Since] the amount recovered against the first defendant exceeded the offer by a substantial amount, the offer is not sufficient to displace the usual costs entitlement of a successful plaintiff." [4]
"Calderbank offers are a powerful discretionary consideration... They should not, however, in my view, as a general proposition, entitle the maker to a better outcome than would have been available if an offer under Chapter 9 Part 5 of the UCPR was made." [8]
"Because of the way the costs offer was framed it was never possible for the plaintiff to quantify it with any confidence and therefore give it a value." [10]
"In the result, I do not consider the offers made in this case are sufficient to displace the ordinary position regarding costs." [11]
This judgment is directly instructive where:
In those fact patterns, courts will resist treating the imperfect or joint offers as displacing ordinary costs orders and will demand clear quantification before attributing settlement‑offer consequences.
(As required: ground claims in the source text. The judgment itself does not contain later citations. The following describes how this judgment presents its own position that would be taken by later courts.)
This decision expressly distinguishes Calderbank offers from formal UCPR offers and sets out practical criteria for when a Calderbank offer will be treated as displacing the ordinary costs position: clarity and quantifiability of the costs component and compliance with UCPR timing for the formal regime (see [8], [10]). Later courts considering costs disputes where offers are opaque or joint will find this judgment a useful local example of the application of those principles in Queensland. The judgment will be cited where courts have to evaluate whether a settlement offer was sufficiently clear and valuable to have required acceptance by a reasonable litigant. It is particularly valuable on the practical point that apportionment of costs will not be undertaken where the evidence and issues are inextricable (see [2], [6]–[7]).
Practitioners should take the practical teaching: make settlement offers clear, timely and quantifiable; if you want the automatic consequences of a UCPR offer, comply strictly with its timing and form; avoid joint offers that tie multiple parties together unless their joint discharge is a realistic and fair reflection of the claim structure.
Colin Fleming & Co for the First Defendant (28-29 November 2002) thereafter self represented
[1] On 21 November 2003 I gave judgement in this action for the plaintiff against the first, second and third defendants for the sum of $18,000.00 and against the first defendant for the additional sum of $51,529.00. In the ordinary course of events, that is, in the absence of any relevant settlement offer, the plaintiff would be entitled to costs against each defendant to be assessed on the standard basis. In the case of the first defendant, those costs would be at a rate applicable to a judgement for the sum of $69,529.00 in the District Court. I would ordinarily also award costs against the other two defendants on the same basis. Even though the amount recovered was within the jurisdiction of the Magistrates Court the issues in the action overlapped as against all the defendants and it was appropriate to sue all three in one action. That action should have remained in the District Court where it was commenced.[1]
[2] Even though the plaintiff was unsuccessful against the second and third defendants in relation to the claims for above ground defects in the building, the evidence in relation to the defects in the foundations and above ground was interwoven in such a way that no sensible disentanglement of costs could be achieved. In any event, the plaintiff was successful on all issues against one or more of the defendants. Since all were proper parties to the proceedings the overall length of the trial was not greatly affected.
[3] In this case submissions were invited on costs in the light of what I was told were relevant offers made before the trial by each party.
[4] The first offer was made on 28 June 2002 and was for a sum of $50,000.00 jointly on behalf of the first and third defendants. Since the offer was made jointly and required the discharge of both defendants, and the amount recovered against the first defendant exceeded the offer by a substantial amount, the offer is not sufficient to displace the usual costs entitlement of a successful plaintiff.
[5] On 11 March 2003 the second defendant made an offer to settle the claim against it for the sum of $25,000 plus some costs. There was an alternative the plaintiff could have accepted. That was for the actual cost of articulation and shrinkage joints and rectification of cosmetic damage. On the basis of my judgement this was substantially less than $25,000. The costs offered were to be on "the appropriate scale". No such scale was identified so I presume the Magistrates' Court scale was intended.[2] The costs involved were 100% of the costs specific to the claims for articulation and shrinkage joints, a further amount for "items of costs that are common to all defendants" in the proportion that $25,000 bore to the total amount recovered for those items. These costs excluded costs incurred on specific claims against the first and third defendants.
[6] The second defendant successfully defended the issues in relation to which it offered to pay 100% of the costs. The first defendant, which was found liable for the shrinkage and articulation joint problems, did not really contest that such joints should have been installed, but were not. In any event, the evidence in relation to the defects in the foundations and above ground (including shrinkage and articulation joints) was inextricably linked. All of the engineers called dealt with the matters comprehensively. In other words, they dealt with the foundations for which the second defendant was liable along with the cosmetic defects, the lack of control joints and the lack of lateral support in a single report. Therefore, even if it were possible to separate any costs specifically referable to a particular alleged defect, which I doubt, those costs would be negligible. By 11 March 2003 the trial had already commenced. The hearing proceeded over two days on 28 and 29 November 2002. It was then adjourned until 24 March, 2002 where five days were allocated. On 16 June 2003 the action could not proceed because of the incapacity of the plaintiff's counsel. On 23 June 2003 the second defendant brought an application for summary judgement which was unsuccessful. Costs of that application were previously dealt with. There were three subsequent days on which evidence was taken.
[7] If, by "items of costs that are common to all defendants", the second defendant meant only items of costs specifically referable to issues on which all defendants were liable either by judgement or agreed payment to the plaintiff, the problem is again that such items cannot be separated from the general costs because of the way the action was conducted by all sides. However, it is looked at, the offer is for something less than 100% of costs.
[8] The offer was one made in reliance on the decision in Calderbank v Calderbank[3]. It could not be an offer under Chapter 9 Part 5 of the Uniform Civil Procedure Rules because the offer closed on 21 March 2003, less than 14 days after it was made. Calderbank offers are a powerful discretionary consideration in the determination of the appropriate costs order. They should not, however, in my view, as a general proposition, entitle the maker to a better outcome than would have been available if an offer under the rules was made. An offer made under Chapter 9 Part 5 of the UCPR, if not accepted, entitles a defendant who makes it to standard costs from the date the offer is made, but only if the plaintiff's recovery is not more favourable than the offer.
[9] Determination of the value of the offer in this case is complicated by the unwieldy and, in my view, unrealistic, offer in relation to costs. The judgement sum offered exceeded the judgement obtained against the second defendant by $7,000. The value of the costs order offered is, as I have understood it, dependant on the value of costs which can be identified as relevant to specific issues. It is thus of doubtful value for the reasons I have already indicated. Even if costs were awarded on the Magistrate's Court scale applicable to a judgement for $18,000, the total of items 1, 5(a), 6(f), 6(h) and 8(a) comes to over $6,000 for the two days of hearing before the offer was made. It may be that there are other relevant scale items and there are also the outlays for the engineering reports from Mr Perkins and Mr Stanaway, and the cost of the engineers conferring before the trial. The total would certainly exceed $7,000 by a significant amount.
[10] While, in the end, having regard to the costs spent after the offer was made by the second defendant, the plaintiff may well be worse off as a result of not having accepted the offer, this conclusion depends on valuing the costs paid by the plaintiff to its solicitors and counsel pursuant to their private arrangements and comparing this with costs assessed on the standard basis. That would not be a proper exercise to embark on. In the end, I consider the proper enquiry is to determine whether the amount recovered together with the value of the appropriate costs order up to 11 March 2003, as I have indicated above, was more or less favourable than a sum of $25,000 plus the rather odd offer in relation to costs made by the second defendant. As a result of the difficulty with the costs portion of the offer, and somewhat reluctantly, I cannot conclude that in fact the ultimate recovery by the plaintiff was not more favourable than the offer when costs are take into account. Because of the way the costs offer was framed it was never possible for the plaintiff to quantify it with any confidence and therefore give it a value. It had to be worth less than standard costs on the District Court scale on any view.
[11] In the result, I do not consider the offers made in this case are sufficient to displace the ordinary position regarding costs. Hence, I order the defendants to pay the plaintiff's costs of and incidental to the action to be assessed on the standard basis applicable to an action in the District Court where the amount recovered is $69,529.00. The defendants are entitled to their costs of the adjourned hearing on 16 June 2003. Even though the adjournment was not a matter within the plaintiff's control, it is not a cost the defendants should bear. I order to plaintiff to pay the defendants' reserved costs of that day to be assessed on the standard basis.
[12] Liability as between the defendants for the sum in which judgement was obtained against all of them was apportioned 20% to the first defendant, 40% to the second defendant and 40% to the third defendant. The second defendant is entitled to the benefit of the same contribution pursuant to its notices of contribution or indemnity. As between defendants, the second defendant is entitled to be indemnified by the first and third defendants for costs paid by it which exceed 40% of the plaintiff's standard costs in the same proportions the first and third defendants are required to indemnify the second defendant for the judgement amount.
[1] Uniform Civil Procedure Rules rule 698(2) relates only to the relief in the proceeding. It does not separate claims against individual defendants in the same action.
[2] See Uniform Civil Procedure Rules rule 698(2).
Brian Geaney Pty Ltd & Anor
Close Constructions Pty Ltd & Ors [2003] QSC 424
Orders: (1) Defendants to pay plaintiff's costs of and incidental to the action to be assessed on the standard basis applicable to an action in the District Court where the amount recovered is $69,529.00; (2) Plaintiff to pay the defendants' reserved costs of 16 June 2003 to be assessed on the standard basis; (3) Between defendants, second defendant entitled to be indemnified by the first and third defendants for costs paid by it which exceed 40% of the plaintiff's standard costs in the same proportions the first and third defendants are required to indemnify the second defendant for the judgment amount (see [11]–[12]).