Yogini v Eveille & Anor [2006] ACTSC 23

3. In the substantive judgment, I assessed total damages at $148,098.60. However, I found that the damages must be reduced by 75% to reflect the contributory negligence of the plaintiff.

4. After reduction, the plaintiff recovered $37,024.65. That sum is less than the jurisdictional limit of $50,000 of the Australian Capital Territory Magistrates Court: s 257(1) of the Magistrates Court Act 1930 (ACT).

5. The parties have filed written submissions on the question of costs. I have taken those submissions into account in determining the appropriate costs order.

6. The issue before me is whether, as a matter of discretion, the plaintiff is entitled to recover costs at the Supreme Court scale, or whether (as the defendants submit) the plaintiff is able only to recover costs at the Magistrates Court scale.

7. There is some dispute between the parties whether ss 181 and 184 of the Civil Law (Wrongs) Act 2002 (ACT) or O 65 r 7A of the Supreme Court Rules 1937 (ACT) apply to the application before me. The defendants say that the Wrongs Act does not apply to party and party costs, but only to solicitor and client costs. They say O 65 r 7A is applicable. The plaintiff rejects that view but made alternative submissions on the basis that O 65 r 7A is applicable.

8. The relevant provisions of the Wrongs Act are in the following terms:

181 Maximum costs for claims of $50,000 or less

(1) This section applies if the amount recovered on a claim for personal injury damages is $50,000 or less.

(b) a court (or a taxing officer) must not decide that a lawyer is entitled to be paid; and

(c) a court must not order anyone to pay to a lawyer;

an amount for legal services in relation to the claim that (or that together with other amounts) is more than the maximum costs allowable under this section.

(3) Subsection (2) is subject to the following sections:

* section 184 (Court discretion to allow additional costs).

(4) The maximum costs allowable for legal services provided to the plaintiff in relation to the claim are the greater of--

(a) the relevant percentage of the amount recovered; and

(a) includes an amount paid under a compromise or settlement of the claim, whether or not an action has been begun; but

(b) does not include an amount attributable to costs or to the addition of interest.

relevant amount means $10,000 or, if another amount is prescribed by regulation for this definition, the prescribed amount.

relevant percentage means 20% or, if another percentage is prescribed by regulation for this definition, the prescribed percentage.

184 Court discretion to allow additional costs

(1) This section applies if a court, or a taxing officer, decides (on the court's or taxing officer's own initiative or on the application of a party to the claim) that the maximum costs for legal services allowable under this part in relation to a claim for personal injury damages should be increased because of--

(b) the behaviour of 1 or more of the parties to the claim."

9. Section 134(1) of the Court Procedures Act 2004 (ACT) provides that this Court "shall have jurisdiction to award costs in all matters brought before the court...". This Court's jurisdiction to award costs is subject to any other law of the Territory, including the Rules.

10. In circumstances where the amount recovered is less than the jurisdictional limit of the Magistrates Court, O 65 r 7A of the Rules applies. This rule provides a sanction whereby a party may be penalised on costs for commencing a proceeding in the Supreme Court which should have been brought in the Magistrates Court.

11. O 65 r 7A(1)(b) of the Rules relevantly provides that:

"This rule applies to a suit that the Magistrates Court -

(b) would, apart from the amount claimed, have had jurisdiction and power to hear and decide."

12. Order 65 r 7A(2) sets out the rule to be applied:

"If the plaintiff is entitled to the costs of the suit, and recovers an amount (excluding costs) of not more than $40,000, the plaintiff is entitled only to -

(a) the costs, at the appropriate scale, that the plaintiff would have been entitled to recover if the suit had been begun in the Magistrates Court; and

(b) the amount of any Magistrates Court determine fee that the plaintiff would have been entitled to recover if the suit had been begun in the Magistrates Court."

13. Order 65 r 7A(5) provides this Court with a discretion to "order that the plaintiff is entitled to a different amount for the costs...".

14. Accordingly, the effect of the rule in O 65 r 7A is that, in the absence of an exercise of discretion to the contrary, where a plaintiff recovers an amount (excluding costs) of not more than $40,000 the costs would be awarded at the Magistrates Court scale rather than at the Supreme Court scale.

15. I note that O 65 r 7A has undergone a number of amendments since its insertion into the Rules in 1969, the most recent of these amendments being in 2004. While these amendments alter the language of r 7A, in my view, they do not alter its underlying purpose. Gallop J discussed the rationale for this rule in Ditton v Gallagher (1992) 110 ACTR 12 at 16:

"The broader purpose of O 65 r 7A is, in my opinion, to discourage litigants from taking proceedings in this Court when the Magistrates Court is appropriate for their case."

16. Master Connolly adopted that view in Kneipp v Halliday [1998] ACTSC 33 (24 April 1998). It is a view with which I agree.

17. The plaintiff submits that ss 181 and 184 of the Wrongs Act govern the exercise of discretion in these proceedings. The plaintiff further submits that:

(a) first, the claim was sufficiently complex (in light of the fact that both liability and quantum were contested, because the state of the law with respect to occupier's liability is "in a state of flux", and because the degree of apportionment ultimately found could not have been foreseeable within reasonable bounds) to warrant that proceedings be brought in this Court;

(b) the conduct of the parties (including the plaintiff's two Calderbank offers) would warrant the exercise of the Court's discretion in the plaintiff's favour; and,

(c) in any event, it was prudent that the matter be brought in this Court because the damages award (prior to apportionment) vastly exceeded the jurisdiction of the Magistrates Court such that it would be unreasonable for the conduct of proceedings by the plaintiff to attract the operation of the cost penalty rule in O 65 r 7A.

18. On the other hand, the defendants submit that the Wrongs Act does not apply. In their view, the issue for this Court is to be resolved by reference to O 65 r 7A of the Rules because, they say, s 181 of the Wrongs Act can be taken to refer only to solicitor and client costs and not to party and party costs.

19. The defendants say that the matter was not complex and that the prudence of any advice to bring the claim in this Court (where contributory negligence is at issue) is irrelevant. The defendants also say that Master Harper's observations in Elizabeth Heywood v Wayne Miller [2005] ACTSC 12, in relation to the comparative financial positions of the parties, may have some application in the circumstances. That is a matter to which I will refer shortly.

20. The plaintiff and the defendants each made further submissions to the Court. Those submissions largely reaffirm the earlier submissions made by each party.

21. The written submissions did not refer to the judgment of Gallop J in Symes v Commonwealth of Australia (1987) 89 FLR 356. In Symes, Gallop J ordered costs at the Supreme Court scale by reference to O 65 r 7A(3), even though the plaintiff recovered damages for personal injury, after apportionment, substantially below the jurisdictional limit of the Magistrates Court at the relevant time. It is relevant to note that the award of damages (pre-apportionment) exceeded the Magistrates Court jurisdictional limit.

22. In exercising my discretion under O 65 r 7A(5), I am guided by the views of his Honour in that case concerning the policy underlying provisions which allow for costs on the Supreme Court scale despite an order for damages on what would otherwise attract a lower scale. Although Gallop J did not find any particular complexities of fact or law in that case, his Honour went on to state at 358:

"A matter which does influence me, however, is the fact that the damages assessed exceeded the jurisdiction of the Magistrates Court. Although it is not relevant to consider what the plaintiff or his advisers would or might reasonably expect to recover at the time the proceedings were instituted, it seems to me that it would not be reasonable to require the plaintiff's advisers to make a prophecy about the level of damages which the plaintiff could reasonably expect to recover and the degree of apportionment by which that quantum might be reduced by reason of contributory negligence by the plaintiff. It is a reasonable prognostication that the plaintiff will have his damages assessed at more than the statutory limit that he might recover in the Magistrates Court, it is a proper step in the course of the litigation to institute proceedings in the Court which has the jurisdiction to award those damages, rather than in the Court which does not have that jurisdiction." (Emphasis added.)

23. In this proceeding, both quantum and liability were in dispute. The plaintiff led expert medical evidence on the question of quantum and similarly detailed evidence and complex submissions on the current state of the law on the question of liability. While I consider that those issues are within the experience and competence of the Magistrates Court, I find that the issues before me were sufficiently complex to lead to an exercise of discretion in favour of the plaintiff.

24. The plaintiff properly brought this proceeding in this Court. Total damages were assessed at $148,098.60, almost three times the jurisdictional limit of the Magistrates Court. Further, the plaintiff's advisers could not reasonably be expected to predict with any degree of certainty the level of apportionment that would be ordered at trial. Much in that regard depended on the evidence of the plaintiff.

25. I do not see that the discretion to be exercised pursuant to the Wrongs Act should necessarily be more narrowly confined than the discretion available to me under the Rules. Section 184 of the Wrongs Act emphasises two matters. They are: the complexity of the claim and the behaviour of one or more parties to the claim. The Rules provide no such internal guidance. I acknowledge the valid policy reasons which underlie the broad discretion given to the courts of this Territory, and I do not intend to narrow that discretion. I am of the view that the discretion to be exercised pursuant to the Rules, at the very least, encompasses those considerations contemplated by the Wrongs Act.

26. Therefore, I do not think it necessary to decide the issue of whether the discretion I am exercising is pursuant to the Wrongs Act. I am content to decide the matter upon the application of the Rules. Order 65 r 7A(5) of the Rules unambiguously gives me the discretion to make the order that I propose. The defendants do not dispute this point.

27. The defendants submit that the following statement of Master Harper in Heywood might guide this Court in exercising its discretion in the present case. Master Harper said at [20]:

"I am of the view that in exercising a discretion as to costs in personal injury actions, a further relevant consideration is the impact of the costs order sought on each of the parties. This may require some consideration of their comparative financial positions."

28. The defendants stated in their written submissions that they had allowed the public liability insurance cover over the residential building site to lapse prior to the plaintiff sustaining her injuries. However, the defendants did not bring or seek leave to adduce further material before the Court in the issue of the comparative financial position of the parties.

29. In Heywood the Master was concerned with a costs order being sought against a natural person of extremely modest means by a corporation. Those circumstances do not apply in this case. Absent any evidence to the contrary, I do not find that there is any sufficient inequity between the parties in these proceedings to attract the consequence envisaged by the Master.

30. Accordingly, I will make an order to the effect that the plaintiff's party and party costs be at the Supreme Court scale, and that those costs be agreed or taxed.

I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Marshall.

Solicitor for the plaintiff: Pamela Coward & Associates

Date of Completion of written submissions: 27 March 2006