Fail v Hutton & Anor [2003] QSC 291

[2] On the first working day after the trial the plaintiff served on the defendant an offer to settle pursuant to ch 9 part 5 of the Uniform Civil Procedure Rules 1999. No other offer to settle was made in the action.

TAKE NOTICE that the Plaintiff hereby offers to accept the sum of THREE HUNDRED THOUSAND DOLLARS ($300,000) inclusive of statutory refunds, plus payment of the plaintiff's standard costs and outlays of the actions inclusive of the fees for Senior Counsel to the date of acceptance of this offer in satisfaction of the plaintiff's claim.

The offer was not accepted and expired before judgment was delivered.

[4] The plaintiff's damages were assessed at $360,587.40 and judgment was given against the second defendant. The parties were then given the opportunity to make written submissions as to the costs and did so.

[5] The plaintiff seeks an order pursuant to UCPR 360(1) that the defendant pay his costs assessed on an indemnity basis. The second defendant opposed the order with a fall back position that if indemnity costs were ordered costs should be on a standard basis up to the offer being made and then on an indemnity basis.

[6] The plaintiff's counsel conceded that senior counsel's fees would not ordinarily be recoverable in an assessment on a standard basis in this case. The introduction of a qualification such as that in respect of senior counsel's fees may well jeopardise a party being able to take advantage of a successful offer.

[7] It is unnecessary to decide that here. The plaintiff's counsel submitted, it seems to me justifiably, that the plaintiff obtained a judgment "no less favourable" than the offer and the qualification is therefore of no consequence.

[8] In an action such as this an offer to settle may be served "at any time before final relief is granted" UCPR 354(1)(b). It may be noted that in a jury trial an offer may be served at any time before verdict, R354(1)(a). Where an account is claimed or there is a judgment conditional on the assessment of damages an offer may be made at any time prior to the certificate as to account or before damages are assessed, R354(2)(3).

[9] The conditions of UCPR 360(1) that the plaintiff make an offer that is not accepted, obtains a judgment no less favourable than the offer and that the plaintiff was willing and able to carry out the offer are satisfied in this case.

[10] In those circumstances, the court "must order the defendant to pay the plaintiff's costs calculated on an indemnity basis" unless the defendant shows another order for costs is appropriate in the circumstances.

[11] It is clear from the provisions of UCPR 354 that it was open to either party to make an offer to settle at any time up to judgment.

[12] One of the considerations the recipients of an offer has to take into account in determining whether or not to accept it is that if the other obtains a judgment no less favourable an indemnity costs order might be made. In other words it is part of the scheme of the rules to exert pressure on a party to consider an offer made in accordance with the rules. See Connolly v Skrapulj (McDonald J) Supreme Court of Victoria 434 of 1990 judgment delivered 2 March 1993, p9(a).

[13] There is no question raised in the present case of the second defendant not having had a proper opportunity to consider the offer before it expired or of having been deprived of an opportunity to make an informed decision as to whether or not the offer should be accepted.

[14] Such considerations were held to show that "another order for costs was appropriate" in Castro v Hillery & Ors 2002 QCA 359, Campbell v Jones & Ors 2002 QCA 332, Ross v Quirk & Anor DC1439 of 2000 (Court of Appeal) and Morgan v Johnson (1998) 44 NSWLR at 578.

[15] The second defendant submitted to the effect that if indemnity costs were allowed they may include costs to be assessed by reference to a client costs agreement the terms of which were not disclosed. Reference is made to Campbell v Jones & Anor 2002 QCA 332 in the joint judgment of Fryberg and Mullins JJ's at para [74].

[16] There is no evidence that there was such an agreement in this case or of its term if there was. Campbell was a case which considered solicitor/client costs in the context of an agreement which was in evidence together with evidence of the amount of the costs.

[17] The prospect of a client costs agreement in the circumstances of the present case is no more than speculative. It does not discharge the defendant's onus to show that "another order for costs" should be made.

[18] The defendant sought to rely on UCPR 5(1) which identifies the philosophy behind the rules as to "facilitate the just and expeditious resolution of real issues in civil proceedings at minimum expense". It was submitted that given the plaintiff's failure to make an early offer but to allow him the cost advantage of a successful post trial offer "defeated that philosophy." I do not think that is a sufficient reason for "another order".

[19] As I have already said the rules expressly contemplate either party making an offer at any time before judgment. An argument that an offer made after trial is made after court resources have been utilised and costs substantially incurred may not be without merit. The rule however expressly contemplates that happening as has happened here.

[20] The second defendant has not, in my view, shown that an order other than costs on an indemnity basis is appropriate in these circumstances.