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[2015] QCA 84
General information, not legal advice.
Court of Appeal (Qld)
2015-05-15
Margaret McMurdo P and Morrison JA and Applegarth, J, Separate reasons for judgment of each member of the Court, each concurring, as to the orders made
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Source: Queensland Judgments (Supreme Court Library Queensland) (www.queenslandjudgments.com.au). Converted to plain text by ZoeLaw. Not the official version.
SUPREME COURT OF QUEENSLAND
CITATION: Westpac Banking Corporation v Jamieson & Ors [2015] QCA 84
PARTIES: WESTPAC BANKING CORPORATIONABN 33 007 457 171 (appellant/cross-respondent) v MARK BRYAN JAMIESON (first respondent/first cross-appellant) LORRELL BERNADETTE JAMIESON (second respondent/second cross-appellant) JAMIESON INVESTMENTS QLD PTY LTD ACN 103 273 070 as trustee for The M & L SUPER FUND (third cross-appellant)
FILE NO/S: Appeal No 3234 of 2014 / SC No 3536 of 2011
DIVISION: Court of Appeal
PROCEEDING: General Civil Appeal – Further Orders
ORIGINATING COURTS: Supreme Court at Brisbane – [2015] QCA 50; [2014] QSC 32
DELIVERED ON: 15 May 2015
DELIVERED AT: Brisbane
HEARING DATE: Heard on the papers
JUDGES: Margaret McMurdo P and Morrison JA and Applegarth J / Separate reasons for judgment of each member of the Court, each concurring as to the orders made
ORDERS: **The appellant pay the respondents’ costs of and incidental to the appeal, including the costs of and incidental to the notice of contention, to be assessed on the standard basis.****The cross-appellants pay the cross-respondent’s costs of and incidental to the cross-appeal, to be assessed on the standard basis.**The first cross-appellant pay the cross-respondent’s costs of and incidental to the application filed 10 September 2014, to be assessed on the standard basis.
CATCHWORDS: PROCEDURE – COSTS – GENERAL RULE – COSTS FOLLOW THE EVENT – COSTS OF WHOLE ACTION – WHERE MONEY PAID INTO COURT OR OFFER OF COMPROMISE MADE – OFFER OF COMPROMISE MADE – where the bank unsuccessfully appealed from judgment made against it – where respondents rely upon bank’s rejection of a Calderbank offer to found an application for indemnity costs – where the offer made was not a substantial compromise on the judgment sum and post-judgment interest – whether bank’s rejection of offer unreasonable – whether there are special or unusual circumstances that justify an award of indemnity costs / PROCEDURE – COSTS – GENERAL RULE – COSTS FOLLOW THE EVENT – DEPARTING FROM THE GENERAL RULE – OTHER CASES – SUBSTANTIAL SUCCESS/FAILURE IN PORTION OF A CASE – where the bank appealed and the respondents cross-appealed and also filed a notice of contention – where the appeal was dismissed such that issues raised by the notice of contention did not need to be determined – whether the costs occasioned by the notice of contention should be borne by the bank or the respondents or whether there should be no order as to costs / Uniform Civil Procedure Rules 1999 (Qld), ch 9 pt 5 / Australian Conservation Foundation v Forestry Commission of Tasmania (1988) 81 ALR 166; [1988] FCA 144, cited / Australian Securities Commission v Aust-Home Investments Ltd & Ors (1993) 44 FCR 194; [1993] FCA 585, cited / Calderbank v Calderbank [1975] 3 WLR 586; [1976] Fam 93, cited / Grice v State of Queensland [2005] QCA 298, cited / Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298, cited / Mizikovsky v Queensland Television Ltd [2014] 1 Qd R 197; [2013] QCA 68, cited / Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, cited / Palace Gallery Pty Ltd v Liquor and Gambling CMR (No 2) (2014) 120 SASR 299; [2014] SASCFC 53, cited / Ralph Lauren 57 Pty Ltd v Byron Shire Council (2014) 199 LGERA 424; [2014] NSWCA 107, cited / Roberts v Prendergast [2013] QCA 89, considered / Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd [2011] QCA 312, cited / Westpac Banking Corporation v Jamieson [2015] QCA 50, related
COUNSEL: A P J Collins for the appellant/cross-respondent / C C Heyworth-Smith QC, with L J Allen, for the respondents/cross-appellants
SOLICITORS: Sparke Helmore for the appellant/cross-respondent / Schultz Toomey O'Brien for the respondents/cross-appellants
MARGARET McMURDO P: I agree with Applegarth J that, despite the respondents’ Calderbank1 offer, the respondents have not demonstrated sufficient reason for this Court to depart from the usual order that the unsuccessful party pays the costs of an appeal on the standard basis.
I agree with the orders proposed by Applegarth J.
MORRISON JA: I have had the advantage of reading the reasons of Applegarth J and agree with those reasons and the orders his Honour proposes.
APPLEGARTH J: This Court made orders on 10 April 2015 that:
The appeal filed 4 April 2014 be dismissed.
The cross-appeals filed 22 April 2014 be dismissed.
The first respondent’s/cross-appellant’s application filed 10 September 2014 be dismissed.
The parties have leave to make submissions as to costs in accordance with Practice Direction 3 of 2013.
I observed that, subject to further submissions, the starting point on costs would be for the costs of the appeal and the costs of the cross-appeals to follow the event.2
The bank submits that this “starting point” should reflect the ultimate order for costs. In addition, it submits that Mr Jamieson should pay its costs of the application to adduce further evidence, and that Mr and Mrs Jamieson should pay its costs of their notice of contention. The bank seeks its costs of the notice of contention, notwithstanding the fact that the dismissal of the bank’s appeal made it unnecessary to address it.3
The Jamiesons submit that there are grounds to depart from the starting point that the costs of the appeal and the costs of the cross-appeals should follow the event. They rely upon a Calderbank offer made on 11 June 2014, which remained open for a period of 14 days. The letter expressly reserved the right to rely upon the offer to found an application for indemnity costs if the offer was not accepted. Their offer was to resolve “all appeals between all parties” on the basis that:
(a)the bank pay Mr Jamieson the sum of $890,000 plus costs;
(b)the bank pay Mr and Mrs Jamieson the sum of $150,000 plus costs;
(c)all appeals were otherwise discontinued;
(d)each party bear its own costs of and incidental to the appeals.
This Calderbank offer was made within a few months of the filing of the appeal, which was heard on 18 and 19 September 2014. Substantial costs presumably had been incurred in the conduct of the appeal and cross-appeals by the time the offer was made. However, substantial further costs must have been incurred after the offer was made and declined.
As to the amounts contained in the offer, the figure of $890,000 was approximately $30,000 less than the judgment sum in Mr Jamieson’s favour or $35,000 less than it, taking into account statutory interest to the date of the offer. The figure of $150,000 was approximately $17,000 less than the judgment sum in favour of Mr and Mrs Jamieson, or $21,000 less, if account is taken of statutory interest to the date of the offer. In total, the offers were $56,000 less than the judgment sum and interest to the date of offer. This was not an insignificant amount. Still, it was about five per cent of the total judgment sums and statutory interest to the date of the offer.
The Jamiesons submit that this is an appropriate case for the award of indemnity costs on the appeal because:
(a)the bank’s refusal of the offer was “imprudent” in that:
(i)they have achieved an outcome significantly more favourable than their offer;
(ii)acceptance of the offer would have saved a complex appeal heard over two days;
(iii)the offer was predictive of the outcome of the appeal and cross-appeals, but still proposed a significant compromise of that outcome.
(b)the bank is a large institution, wielding a financial power well in excess of that of the Jamiesons who, while not impoverished, lack equivalent resources;
(c)absent an order for indemnity costs where a respondent has achieved a far more favourable outcome than an offer, and where the offer would have saved significant time and resources to the parties and to the Court, there will be no motivation for large, well-resourced litigants such as the bank to settle appeals.
Relevant principles
The usual order is that the costs of an appeal are to be assessed on the standard basis and that an assessment will be ordered on the indemnity basis only when “the conduct of the appeal by a party has been ‘plainly unreasonable’ or there are other ‘special or unusual features’ justifying a departure from the usual course”.4
There is “no presumption or predisposition in favour of ordering assessment on the indemnity basis arising merely from a party to an appeal rejecting an offer and subsequently obtaining a less favourable judgment.”5 Expressed differently, a mere failure to accept an offer to settle an appeal which is subsequently unsuccessful is not sufficient to warrant an award of indemnity costs to the respondent.6
In determining whether an appellant has acted unreasonably or imprudently in not accepting a respondent’s offer, account must be taken of all relevant circumstances including:
(a)the stage of the proceeding at which the offer was received;
(b)the time allowed to the offeree to consider the offer;
(c)the extent of the compromise offered;
(d)the offeree’s prospects of success, assessed as at the date of the offer;
(e)the clarity with which the terms of the offer were expressed;
(f)whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.7
Was the bank’s conduct in not accepting the offer unreasonable?
The bank’s submissions note that the offer was a “rolled up” offer making the compromise of each appeal (including the notice of contention) contingent on the other. It did not attempt to allow the separate appeals to be dealt with individually. I would not regard the offer as necessarily defective on this ground, since its whole purpose was expressed to be the resolution of all of the appeals which were predicted to be inevitably “very expensive for all concerned”. Next, the bank places reliance on the fact that the Jamiesons each elected to continue to pursue their appeals on which they ultimately failed. The bank submits that it is illogical to attempt to transfer the benefit of one part of the offer (in respect of the bank’s appeal) to the other failed appeals of the Jamiesons. Next, it relies upon the fact that the extent of compromise was relatively minor on each of the claims. The bank submits that it cannot be said that the pursuit of the appeal was plainly unreasonable or that there are special and unusual features justifying a departure from the usual course.
I am not persuaded that the bank’s refusal of the offer and the prosecution of its appeal was imprudent or unreasonable, let alone “plainly unreasonable”.8 The fact that the Court rejected the bank’s appeal does not mean that its appeal had poor prospects of success, and the Jamiesons do not contend that the bank’s appeal had poor prospects.
Acceptance of the offer would have saved a complex appeal, heard over two days. It also would have removed the risk to the bank of the cross-appeals being successful. But the bank was entitled to consider that the Jamiesons’ prospects of success of the cross-appeals were not good, and that its appeal had some prospects. If successful on its appeal, the bank would have been relieved of a substantial judgment and there would have been consequences in relation to the costs of the trial.
Having regard to the parties’ prospects of success, assessed as at the date of the offer, and the extent of the compromise offered, I do not consider that the bank’s conduct in not accepting the offer was unreasonable.
Are there special or unusual circumstances that justify a departure from the usual course?
Disparities in the wealth of parties to civil litigation, including civil appeals, are not unusual. Large, rich institutions, such as banks, are better placed than parties with limited financial resources to absorb adverse costs orders in the event of failure, or the difference between their actual costs and costs assessed on the standard basis in the event of success. But the starting point for all parties is the usual order for costs, namely that a successful party in litigation is entitled to an award of costs in its favour on the standard basis. As between the parties, considerations of fairness support the usual order as to costs.9 As a matter of policy, the usual order as to costs avoids an increase in litigation “with an increased, and often unnecessary burden, on the scarce resources of the publicly funded system of justice”.10 Such an order seeks to compensate a successful party in litigation, but it does not operate as a complete indemnity.
The usual order applies to successful parties, rich and poor. The fact that a successful party to an appeal is poor, or relatively poor compared to the unsuccessful party, is not unusual, and is an insufficient reason to depart from the usual order that costs be assessed on the standard basis.
The law governing costs does not provide special measures for parties of limited means to be rewarded in the form of special bonuses when they succeed in litigation against far better resourced parties. Such a system might deter wealthy parties from persisting in unmeritorious claims and unmeritorious defences, and from prosecuting unmeritorious appeals. But the creation of such a system is not an appropriate matter for the exercise of a judicial discretion in a case such as this. Rules which create proper incentives to settle litigation are the proper subject for consideration by law reform bodies, the legislature and courts when exercising their power to make court rules.
The existing system creates incentives to settle by allowing costs to be assessed on an indemnity basis in certain circumstances. Rules governing certain litigation, but not appeals,11 enable parties to make offers to settle in accordance with Chapter 9 Part 5 of the Uniform Civil Procedure Rules 1999 (Qld). A Calderbank offer may be made by a party to an appeal. Rich and poor parties alike may make use of available court rules and make Calderbank offers in appropriate cases so as to enhance their prospects of obtaining an order for costs on an indemnity basis.
In practice, a party may be required to make a substantial offer of compromise in order to gain the protection of an indemnity costs order, as occurred in . This may encourage poor parties who are respondents to appeals to offer, and then to sacrifice, substantial amounts as the price to avoid the uncertainty and costs of appeals in which they have, objectively speaking, reasonable prospects of resisting. But this is simply a consequence of a system which generally does not make distinctions between rich and poor litigants, and which therefore does not address the power of the rich to drive hard bargains with the poor.
The costs of the notice of contention
The parties’ written submissions did not engage with the issue of whether the additional costs occasioned by the Jamiesons’ notice of contention should be paid by the bank, by the Jamiesons, or whether there should be no order in relation to those costs.
As noted, the bank’s submissions contend, without any explanation, that the Jamiesons should pay its costs of the notice of contention, notwithstanding that the Court found it unnecessary to deal with those contentions.
The Jamiesons’ submissions treat the costs of the notice of contention as falling in the same category as the costs of the bank’s appeal. Presumably, this is on the basis that if the bank’s unsuccessful appeal had not been filed and prosecuted, no occasion would have arisen for the Jamiesons to file and prosecute a protective notice of contention. But this argument may not be sufficient to justify the bank being required to pay the Jamiesons’ costs of the notice of contention, which the bank contested.
It has been unnecessary to determine the points raised by the notice of contention. Those points would not have been raised if the bank had not appealed. But if the points raised in the notice of contention, and argued at the hearing, were unreasonably raised and totally lacked merit, then there would be a case for requiring the Jamiesons to pay the bank’s costs of responding to them.
In a proceeding in which there has been no determination on the merits, and no unreasonable behaviour by a party, a common order is that there be no order as to costs.13 In many cases a party, for good reason, elects not to pursue a proceeding to a final hearing, possibly because the party has obtained the relief sought by other means. In such a case, there is no hearing on the merits because neither party seeks such a hearing. The court may not be in a position to assess what the outcome of the proceeding would have been.14 Unless it is clear that the proceeding was bound to fail or bound to succeed, the court may be inclined to not make an order for costs in favour of either party.
However, any analogy with such a case is not strong. The arguments on the notice of contention were heard, and this Court might have determined its various aspects. It proved unnecessary to do so because the appeal was dismissed.
A better analogy is with an additional ground of defence to a claim which proves unnecessary for a court to determine, because the defendant succeeds on its primary ground of defence. In such a case, the unsuccessful plaintiff might seek to argue that it should not be required to pay the successful defendant’s costs of the additional defence if, for example, the defendant acted unreasonably in pleading it, or the defence was bound to fail. But absent such features, the successful defendant is awarded all of its costs, being the costs of running the defence upon which it succeeds and the defence which the court found it unnecessary to decide.
Conclusion
1.The appellant pay the respondents’ costs of and incidental to the appeal, including the costs of and incidental to the notice of contention, to be assessed on the standard basis.
2.The cross-appellants pay the cross-respondent’s costs of and incidental to the cross-appeal, to be assessed on the standard basis.
3.The first cross-appellant pay the cross-respondent’s costs of and incidental to the application filed 10 September 2014, to be assessed on the standard basis.
Calderbank v Calderbank [1976] Fam 93. ↩
Westpac Banking Corporation v Jamieson [2015] QCA 50 at [227]. ↩
At [226]. ↩
Roberts v Prendergast [2013] QCA 89 at [12] and [24] – [25] (“Roberts”) and the cases cited therein. ↩
At [12]. ↩
Grice v State of Queensland [2005] QCA 298 at [7] and see Mizikovsky v Queensland Television Ltd [2014] 1 Qd R 197 at 214 [54]. ↩
Roberts at [12] following Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at 441 [23], 442 [25] and Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd [2011] QCA 312 at [105] – [106]. ↩
Some decisions have adopted a test of unreasonableness without reference to the requirement that the conduct of the party be “plainly unreasonable”. ↩
Oshlack v Richmond River Council (1998) 193 CLR 72 at 97 [67]. ↩
At 97 [68]. ↩
Roberts at [4], [13]. ↩
Westpac Banking Corporation
Jamieson & Ors [2015] QCA 84
(1988) 81 ALR 166
(1993) 44 FCR 194
(2005) 13 VR 435
(1998) 193 CLR 72
(2014) 120 SASR 299
(2014) 199 LGERA 424
Arguably, the exercise of a discretion to award costs on an indemnity basis in favour of successful respondents who offer only a small amount by way of compromise may serve a useful purpose in deterring unnecessary appeals. It may protect poor parties who are respondents to appeals from incurring costs which cannot be recovered under the usual order as to costs. But that is not, in itself, a reason to make an indemnity costs order in favour of a party who has offered only a small amount by way of compromise.
Such a practice may have unintended consequences in deterring the poor and parties with only limited means from pursuing meritorious appeals, out of a concern about their exposure to an order for indemnity costs if they do not accept an offer of only a small amount by way of compromise. Such an approach also would seem to require, as a matter of consistency, an order for indemnity costs in favour of a successful appellant who has offered a relatively moderate or small amount by way of compromise.
Departure from the usual order as to costs is not justified by simply the offer of a small amount by way of compromise, even when that offer comes from the poorer of the parties.
Banks, like all other parties, should be encouraged by the threat of an indemnity costs order to settle appeals which have especially good or especially poor prospects of success. The settlement of appeals in which the outcome is quite clear saves private and public resources. But when an appellant has reasonable prospects in an appeal, the interests of justice, including the correction of judicial error, usually will be served by the appeal being heard on its merits, rather than compromised under the threat of an indemnity costs order. The successful party is protected, but not completely indemnified, by the usual order as to costs. The unsuccessful party has to pay costs, but usually not on an indemnity basis. That is the usual case.
I conclude that this is not an unusual case, and there are no special circumstances which justify all or part of the Jamiesons’ costs being awarded on an indemnity basis. It is not unusual for parties to an appeal to be unevenly matched in terms of their wealth.
The Jamiesons, as both respondents and cross-appellants, made an offer of compromise in the hope that it would motivate the bank to settle under the threat of an application for indemnity costs if its appeal was dismissed. But the extent of compromise offered was not very large, and the bank’s prospects on the appeal were not so poor as to put it in some special category.
If the Jamiesons’ offer of compromise had been more generous, or the bank’s prospects of success on its appeal had been very poor, then the bank’s refusal of such an offer may have been unreasonable, and engaged the principles governing unreasonable refusals of offers of compromise. But the bank’s refusal of the Jamiesons’ offer was neither imprudent nor unreasonable. There are no special or unusual circumstances that justify a departure from the usual course.
Although the bank persuasively responded to the points raised in the notice of contention, it does not submit that the points raised by the Jamiesons were so unreasonable that they should not have been raised, or that the Jamiesons acted so unreasonably in connection with the notice of contention that the bank should have its costs of dealing with it.
As between making no order as to the costs of the notice of contention and ordering that the bank pay the Jamiesons’ costs of the notice of contention, I incline towards the latter.
The Jamiesons did not have to file a notice of contention. They chose to do so as a precautionary measure, and in doing so added to the complexity and duration of the appeals. But this seems little different to a successful defendant who is not forced, at its peril in respect of costs, to oppose a claim on only one basis.15
The Jamiesons, in the interests of maintaining the judgments in their favour, were entitled to raise viable arguments by way of a notice of contention. It has not been shown that their arguments were devoid of merit or that they otherwise engaged in unreasonable conduct in respect of the notice of contention.
[2005] QCA 298. Cf. Roberts in which, by majority, a substantial offer of compromise by the successful appellant was insufficient to result in an order that the respondent’s costs of and incidental to the appeal be assessed on the indemnity basis. ↩
Australian Securities Commission v Aust-Home Investments Ltd & Ors (1993) 44 FCR 194 at 200 – 201; Ralph Lauren 57 Pty Ltd v Byron Shire Council (2014) 199 LGERA 424 at 445 [107] – 446 [109]. ↩
Palace Gallery Pty Ltd v Liquor and Gambling CMR (No 2) (2014) 120 SASR 299 at 301 [11]. ↩
Australian Conservation Foundation v Forestry Commission of Tasmania (1988) 81 ALR 166 at 169. ↩