Cameron v Nominal Defendant [2000] QCA 137

[1] THE COURT: This is an application for leave to appeal under s 118(3) of the District Court Act 1967 against a costs order made by a District Court Judge following a personal injuries action requiring the applicant/defendant to pay the plaintiff/respondent's costs to be assessed. We will refer to the applicant as "the defendant" and the respondent as "the plaintiff".

Is this application correctly brought under s 118(3) of the District Court Act 1967?

[2] Mr Everson, who appeared for the plaintiff both at trial and on this appeal, argues that s 69 of the District Court Act 1967 gives a District Court Judge exercising civil jurisdiction "all the powers and authorities of the Supreme Court and any judge thereof"; s 69(3) further provides:

"Subject to this Act and the Rules of Court, the practice and procedure of a District Court or Judge thereof ... shall so far as practicable be the same as the practice and procedure of the Supreme Court or a Judge thereof in like matters."

[3] Mr Everson submits that s 69 brings into operation s 253 of the Supreme Court Act 1995 (previously s 9 of the Judicature Act 1867) which relevantly provides:

"No order made by any judge of the said court ... as to costs only ... shall be subject to any appeal except by leave of the judge making such order."

[4] Therefore, he reasons, there can be no appeal from this costs order without the leave of the primary judge.

[5] The argument is novel, but plainly flawed. Section 69 does not make a costs order of a District Court Judge an order of the Supreme Court; s 253 only applies to specified orders of the Supreme Court; it has no application to a District Court order.

[6] Section 118(2) of the District Court Act 1967 provides a right of appeal from a final judgment of a District Court in its original jurisdiction to the Court of Appeal in certain defined circumstances. A costs order in the District Court is a final judgment: see Colbert v Beard.[1] But as neither the amount of the judgment nor the amount of the costs order was for an amount equal to or of a value equal to or more than the Magistrates Court's jurisdictional limit,[2] those defined circumstances are not met in this case and there is no right of appeal under s 118(2). Section 118(3) of the District Court Act 1967 allows a party dissatisfied with any other judgment of a District Court to appeal to this Court with leave. This application is correctly brought under s 118(3) of the District Court Act 1967.

[7] It is appropriate to deal with the merits of the appeal and the question of leave together. The two matters are interwoven; the issues, which are not complex, can be fairly dealt with on the material currently before this Court and the parties consent to that course.

Did the primary judge err in construing UCPR 361?

[8] On 27 November 1997, the defendant made the plaintiff an offer to settle pursuant to Part 9 of the District Court Rules in the sum of $22,569.40 plus costs. On 17 July 1998, the defendant made the plaintiff an offer to settle under Part 9 of the District Court Rules in the sum of $30,000 plus costs. The UCPR commenced on 1 July 1999. Judgment was given for the plaintiff in the action on 14 December 1999 in the sum of $28,919. Because of its second offer, the defendant sought an order in accordance with UCPR 361 that it pay the plaintiff's costs up until 17 July 1998, the date of the second offer, but that after that date the plaintiff pay its costs. That rule relevantly provides:

(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.

(4) If the defendant makes more than one offer satisfying subrule (1), the first of the offers made is taken to be the only offer for this rule."

[9] The primary judge found that each of the offers made under Part 9 of the District Court Rules 1968 was an "offer to settle" under Part 5 of the UCPR. Neither party contends that this ruling was wrong.[3] It is undesirable to express a concluded view on that issue in the absence of full argument, especially where, for reasons outlined later in this judgment, the correctness of that ruling will not affect the outcome of this application.

[10] The primary judge next determined that UCPR 361(4) required that he should have regard only to the first offer made on 27 November 1997; as that offer was less than the judgment the usual order as to costs applied and the unsuccessful defendant was ordered to pay the plaintiff's costs of and incidental to the action to be assessed.

[11] Whilst the defendant made two offers to settle which were not accepted by the plaintiff, only the second offer to settle was more favourable to the plaintiff than the judgment he obtained. The second offer was the only "offer satisfying subrule (1)" under UCPR 361(4). There seems no good reason to depart from the plain meaning of the words in UCPR 361, namely that if a defendant makes more than one offer satisfying UCPR 361(1), the first of the offers made is taken to be the only offer. This literal approach does not create an absurd or meaningless result or one which cannot be said to conform to the legislative intent as ascertained from the provisions of the rules including the policy which may be discerned from them.[4] Under UCPR 361(2), the date of service of the offer to settle is significant in order to calculate the time from which the plaintiff will be liable to pay the defendant's costs. UCPR 361(4) clarifies the position when there is more than one offer satisfying UCPR 361(1).

[12] The primary judge reached his conclusion as to the meaning of UCPR 361(4) in part by considering the purposive approach to statutory interpretation;[5] the rule was intended "to prevent a multiplicity of offers being made ... [and] to encourage each side to make a realistic assessment of the prospects of the trial in the first instance". UCPR 361 is similar but not identical to Rule 118(2) of the District Court Rules which it replaced. The primary purpose of rules such as UCPR 361 and the similar rules which it replaced[6] is to encourage litigants through favourable costs orders to make realistic offers in order to achieve a just compromise and to avoid where possible the expense, time and effort of a trial. The interpretation of UCPR 361 in accordance with its ordinary and natural meaning is not inconsistent with this purpose or with the purpose of the rules set out in UCPR 5(1), namely "to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense".

[13] Mr Everson submits that the meaning of UCPR 361 is affected by the preceding UCPR 360. This rule deals with costs where a plaintiff has made an offer to settle that is not accepted by the defendant and the plaintiff obtains a judgment no less favourable than that offer. Under UCPR 360(2), if a plaintiff makes more than one offer ("offer" is unqualified by the words used in UCPR 361(4) "satisfying subrule 1") then the offer most favourable to the plaintiff is taken to be the only offer for this rule. The words used in UCPR 360 have not been transported into UCPR 361 and do not affect its ordinary meaning. There are other significant differences between the two rules; UCPR 360 provides for a plaintiff to have all costs paid on the indemnity basis whereas UCPR 361 provides for the plaintiff to pay the defendant's costs on the standard basis after the day of service of the offer to settle. The words in each rule are clear and must be given their ordinary and natural meaning.

[14] The learned primary judge erred in his interpretation of UCPR 361; the only "offer satisfying subrule (1)" was the second offer dated 17 July 1998. The primary judge was required to make the order as to costs under UCPR 361(2) unless a party showed another costs order was appropriate.

[15] Before deciding the next step, it is necessary to decide whether leave to appeal should be granted.

[16] The Uniform Civil Procedure Rules have been in operation since 1 July 1999 but as yet there has been little authoritative discussion of them from this Court. The meaning of UCPR 361 has some general importance and interest to litigants beyond the interests of the present parties. There has been an error of law which has led to an injustice, especially when considering the spirit of UCPR 361 and the similar rules antedating it. Public policy recognises the desirability of encouraging litigants to make realistic offers to settle to avoid unnecessary trials. In these circumstances leave to appeal should be granted. The appeal should be allowed for the reasons given.

[17] The primary judge having misconstrued the meaning of UCPR 361, it is in all interests that this Court now decide the appropriate costs order. UCPR 361 requires a court to order that this defendant pay the plaintiff's costs calculated on the standard basis up to and including 17 July 1998 and that the plaintiff pay the defendant's costs calculated on the standard basis after that date unless the plaintiff shows another order for costs is appropriate in the circumstances.[7] Mr Everson's submission that the offer under UCPR 361(1)(a) was close to the amount of the judgment is not a factor on its own justifying a different order for costs.

[18] Even if the offer of 17 July 1998 was not an offer to settle made under Part 5 of the Uniform Civil Procedure Rules, and UCPR 361 was inapplicable, UCPR 689 states the general rule that costs follow the event but allows a court to depart from that when another order is more appropriate. The offer was "an offer to settle" within Part 9 of the District Court Rules which were applicable at the time of the offer. Had the judgment been obtained prior to 1 July 1999, the defendant would have been required to pay the plaintiff's costs on a party and party basis up to and including the date of service of the offer to settle and the plaintiff would have been required to pay the defendant's costs fixed on a party and party basis after the date of service of the offer to settle.[8] Section 135 of the Supreme Court Act 1991,[9] the public interest in encouraging realistic offers to settle, and the philosophy behind the relevant rules, both at the time of the offer and at the time of the costs order, support the conclusion that the appropriate costs order in this case was that which must have been made had UCPR 361 applied.

[19] The application for leave to appeal should be granted, the appeal allowed, the order made in the District Court on 14 December 1999 as to costs should be set aside, and instead the following order should be made: that the defendant pay the plaintiff's costs calculated on the standard basis, up to and including 17 July 1998 and after that date the plaintiff pay the defendant's costs, calculated on the standard basis, to be assessed.

Appeal Costs Fund Act 1973

[20] Mr Everson requests that this Court grant an indemnity certificate under s 15 of the Appeal Costs Fund Act 1973. This application and appeal relate to the interpretation of new rules of court and raise a matter of some importance to litigants generally.

[21] In the circumstances it is appropriate to grant the certificate sought. We would further order that the respondent be granted an indemnity certificate in respect of the appeal under s 15 of the Appeal Costs Fund Act 1973.

[1] [1992] 2 QdR 67, 68.

[2] Maher v Woodman [1999] QCA 233; Appeal No 6654 of 1998, 22 June 1999.

[3] However see Dale v Frugalis (DC No 64 of 1998, 23 July 1999, McGill SC DCJ).

[4] Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 304-305, 310-311, 320-321.

[5] See Acts Interpretation Act 1954, s 14A.

[9] "Application of Uniform Civil Procedure Rules

135. (1) On the commencement of the Uniform Civil Procedure Rules, those rules apply to the next step or application in a proceeding pending in the Supreme Court, District Court or a Magistrates Court that can reasonably be taken in compliance with those rules.

(2) If a difficulty arises in the application of subsection (1) to a particular proceeding in a court, the court may, on application by a party or on its own initiative, make an order it considers appropriate to resolve the difficulty."