Haddow v Simala & Anor [2010] QSC 293

The decision of the Chief Justice applied the authority of Di Carlo v Dubois & Ors [2002] QCA 225 (at paragraph 37) to award indemnity costs. In Di Carlo, White J with whom Williams JA and Wilson J concurred sets out the relevant considerations:

[33] Rule 703 of the UCPR provides:

“(1) Unless these rules or an order of the court otherwise provide, the registrar must assess costs on the standard basis.

(2) When assessing costs on the standard basis the registrar must allow all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed.”

Rule 704(1) permits the court to order costs to be assessed on the indemnity basis. By r 743(a) and (b) standard and indemnity bases for awarding costs are said to equate to the former taxation of costs on a party and party basis or solicitor and client basis. By r 704(3):

“When assessing costs on the indemnity basis, the registrar must allow all costs reasonably incurred and of a reasonable amount, having regard to –

(a) the scale of fees prescribed for the court;

(b) any costs agreement between the party to whom the costs are payable and the party’s solicitor; and

(c) charges ordinarily payable by a client to a solicitor for the work.”

[34] When making his order for indemnity costs his Honour said:

“… amendments will be allowed if the other side can be sufficiently protected by an order for costs. Well, no one these days can be sufficiently protected by an order for costs unless it is on an indemnity basis because the difference between party and party and solicitor and own client costs is so very considerable. Otherwise I would be paying lip service to the notion that parties can be sufficiently protected by orders for costs….” R321.

[35] The standard basis of assessment in r 703(2) is not materially different from the words used to describe party and party costs in RSC O 91 r 82A but without importing the strictures of r 81. Rule 704(1) imposes a different standard of assessment than previously applied in respect of solicitor and client costs notwithstanding r 743(b) of the UCPR. Whether it is more generous I cannot say. What r 704 does not do is to give guidance as to when an order for costs to be assessed on the indemnity basis might be made. The particular instances mentioned in r 704(2) are of no or little assistance in this regard.

[36] As Sheppard J noted in Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225, there is perceived a growing divergence between what taxing officers consider necessary or proper and the refusal of barristers, solicitors and professional witnesses to accept that guide for their fees and charges. But that does not mean that it is open to an individual judge to award costs having regard to his or her own view as to the adequacy of party and party costs so fixed, see Davies J’s comments to that effect in Ragata Developments Pty Limited v Westpac Banking Corporation (unreported Federal Court 5 March 1993) quoted in Colgate-Palmolive at 231-2.

[37] There are numerous authorities which discuss the circumstances in which a court will be justified in making an order for indemnity costs. Two are regularly cited – Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, a decision of Woodward J, and Colgate-Palmolive. From his review of the cases Sheppard J was able to derive a number of principles or guidelines. At pp 232-4 his Honour recognised that the categories in which the discretion may be exercised are not closed. Woodward J at 637 in Fountain said that there needs to be some special or unusual feature in the case to justify a court departing from the ordinary practice. Sheppard J instanced the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud; misconduct that causes loss of time to the court and the other parties; the fact that the proceedings were commenced at or continued for some ulterior motive; or in wilful disregard of known facts; or clearly established law; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; the imprudent refusal of an offer to compromise; and costs against a contemnor.

[38] The New South Wales Court of Appeal in Rosniac v Government Insurance Office (1997) 41 NSWLR 608 noted at 616 that the discretion to depart from the usual party and party basis for costs is not confined to the situation “of what Gummow J described as the “ethically or morally delinquent party” in Botany Municipal Council v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412 at 415. Their Honours observed however, that:

“…the court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation. This is because party and party costs remain the norm, although it is common knowledge that they provide an inadequate indemnity. Any shift to a general or common rule that indemnity costs should be the order of the day is a matter for the legislature or the rule maker.”

[39] Mr Williams referred the court to two single judge decisions – Sydney Markets Ltd v Sydney Flower Market Pty Ltd BC 200102863, a decision of Hely J of 23 April 2001 and Porter v Thomas Borthwick and Sons (Australia) Pty Ltd BC 200008123, unreported decision of Dutney J of 9 November 2000. In the first case a late amendment to a statement of claim was sought. An adjournment of the imminent trial would cure any prejudice that might be suffered by the defendant and order was made that the costs thrown away as a consequence of the adjournment and the amendment were to be paid on an indemnity basis. There was no discussion of the circumstances in which such an order for indemnity costs might be made. Porter had special facts but in the course of his reasons for judgment Dutney J indicated that had he been minded to grant the adjournment sought by the defendant that would have been with indemnity costs. Again there is no discussion of the basis upon which such costs might be awarded.

[40] It is important that applications for the award of costs on the indemnity basis not be seen as too readily available when a particular party against whom the order is sought is seen to carry responsibility for the state of affairs calling for a costs order without some further facts analogous to those mentioned in Colgate and other considered decisions.

Brisbane Barrister – David Cormack

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