Eggins v Knaus [2007] ACTSC 17 (9 March 2007)

Last Updated: 7 May 2008

BETHANY EGGINS v ALEXANDER KNAUS

[2007] ACTSC 17 (9 March 2007)

COSTS - whether an application under the Civil Law (Wrongs) Act 2002 for costs above $10,000 where not more than $50,000 awarded in damages should be upheld

Civil Law (Wrongs) Act 2002 (ACT)

Legal Profession Act 2006 (ACT)

No. SCC 493 of 2005

Judge: Higgins CJ

Supreme Court of the ACT

Date: 9 March 2007

IN THE SUPREME COURT OF THE )

) No. SCC 493 of 2005

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: BETHANY EGGINS

Plaintiff

AND: ALEXANDER KNAUS

Defendant

ORDER

Judge: Higgins CJ

Date: 9 March 2007

Place: Canberra

THE COURT ORDERS THAT:

1. The costs of the plaintiff in considering and seeking counsel's advice on the "Report on Collision" dated 31 March 2007, insofar as that advice related to that report, are to be excluded from the application of s 181 of the Civil Law (Wrongs) Act 2002.

2. Those costs so excluded are to include the costs of this application.

1. This matter raises the application of Chapter 14 of the Civil Law (Wrongs) Act 2002 (ACT) (CL(W) Act). In particular, the plaintiff applies pursuant to s 184 to increase the costs otherwise recoverable.

Background

2. On 29 July 2003, the plaintiff suffered personal injury in a motor vehicle accident which occurred on Federation Mall, Capital Hill in the Australian Capital Territory. The defendant was travelling in the same direction following the plaintiff and another motor vehicle. Unfortunately, each of the three vehicles was travelling the wrong way on a single lane roadway. The plaintiff realized this and commenced to execute a u-turn. At this point, the defendant decided to overtake the plaintiff's vehicle and the vehicle immediately following her. A collision ensued between the plaintiff's and defendant's vehicles, resulting in a "whiplash" type injury to the plaintiff.

3. Action was commenced by the plaintiff against the defendant on 12 January 2004 in the Magistrates Court at Canberra. It was the defendant's contention that the plaintiff pulled over in front of him so that she was the negligent party. A defence filed 10 September 2004 on behalf of the defendant denied negligence and, as an alternative, pleaded contributory negligence on the part of the plaintiff.

4. On 5 August 2005 the proceedings were, on the application of the plaintiff, removed into this Court. This was, apparently, on the basis that the plaintiff considered it likely that the damages to which she was entitled would exceed $50,000, the limit of jurisdiction of the Magistrates Court. The Particulars of Claim, filed 13 March 2006 reflected that expectation. Indeed, had damages been assessed on the basis of those particulars, total damages could well have been in the order of $100,000.

5. The action was listed before Master Harper on 13 September 2006 but was not reached. On 6 February 2007, the matter came before me. The parties had by then agreed upon terms of settlement which had been formalised in writing and were dated 6 February 2007. By those terms, the defendant consented to judgment for the plaintiff in the sum of $40,000 plus costs "as agreed or assessed". A consent judgment was filed and entered accordingly.

6. The plaintiff thereupon made application before me as referred to above. Mr Pappas, for the plaintiff, argued that the matter had been complicated by the delivery of a traffic engineer's report which had required forensic consideration, though ultimately Mr Pappas had advised the plaintiff that no answering report need be commissioned. The adverse aspects of the defendant's report could, he advised, be dealt with in argument.

7. Ms Donohoe, for the defendant, argued that the issues were no more than ordinarily complex. The major issue was contributory negligence. No special order as to costs was warranted.

8. Mr Pappas contended that the settlement, conceding a degree of contributory negligence of about 50%, had saved two and a half days of court time and expense to both parties, apart from the saving in not engaging further experts to challenge the defendant's expert.

The Legislation

9. Section 181 (CL(W) Act) provides:

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

(2) If this section applies--

(a) a lawyer is not entitled to be paid; and

(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.

...

10. "Costs" for the purposes of that section do not include disbursements (including counsel's fees) (s 180, CL(W) Act). The "amount recovered", by compromise or otherwise, does not include interest (s 181(6) CL(W) Act). The limit, that is, the "relevant amount" on costs, per s 181(6) CL(W) Act is $10,000.

11. The plaintiff's lawyers seek an order under s 184 CL(W) Act. That section provides:

(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--

(a) the complexity of the claim; or

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

(2) The court or taxing officer may order that the lawyer who provided the services is entitled to stated additional costs.

(3) If the court or taxing officer makes an order under subsection (2), the court or taxing officer may state who is to pay the additional costs.

...

The Conclusion

12. I note that s 181 purports to control costs as between a solicitor and his or her own client as well as costs recoverable as between the parties. I am asked to make an order only in respect of costs recoverable as between the parties. I make no decision as to the validity of a law imposing control of fees chargeable and payable as between solicitors and their own clients greater than the traditional professional obligation, recognised by the Legal Profession Act 2006 (ACT), to charge no more than fair and reasonable fees (see, for example, s 279 of that Act).

13. I should also note that the limit of $10,000 is not necessarily the sum to be allowed. It is merely a maximum that may not be exceeded, whether the matter had proceeded in this Court or the Magistrates Court, insofar as s 181 applies.

14. The claim itself was, as Ms Donohoe submitted, not, of itself, particularly complex. It involved a real issue as to contributory negligence but the assessment of damages appears to have been reasonably straightforward.

15. I would not be inclined to the view that the complexity of the claim would warrant an increase in the costs recoverable.

16. However, there is the issue of the "behaviour" of, relevantly, the defendant. I take that to refer, costs being the issue, to the "behaviour" of that party in the conduct of the litigation adding to the cost of it without reasonable justification. Mr Pappas submits that test was satisfied by the defendant unnecessarily commissioning an expert report which required consideration of it that otherwise would not have been necessary.

17. I note that, so far as counsel's fees are concerned, s 181 (CL(W) Act) does not include them in the cap. However, the solicitor's fees are so included, subject to s 184. Those legal services may also be within s 183 (CL(W) Act). That provides:

(1) This section applies to legal services provided to a party to a claim for personal injury damages if a court is satisfied that--

(a) the legal services were provided in response to action on the claim by or on behalf of the other party to the claim; and

(b) in the circumstances, the action was not necessary or reasonable for the advancement of the party's case or was intended, or was reasonably likely, to unnecessarily delay or complicate determination of the claim.

(2) The court may order that the costs for the legal services are to be excluded from the operation of section 181 (Maximum costs for claims of $50 000 or less).

18. The "Report on Collison" of 31 March 2005 ("Report"), does no more than set out the damage to the respective vehicles. It does nothing to resolve the question at issue, "Did the plaintiff signal her intention to divert right before doing so?" nor the issue as to what notice the plaintiff had of the defendant's overtaking manoeuvre. The engineer, nevertheless, concluded that the version of the event given by the defendant was the more likely. He concluded that there had been a diversion to the right by the plaintiff with no warning. How the Report resolved the issue was not by any means clear.

19. Mr Pappas' Memorandum of Advice was exhibited in evidence. It was not confined to liability but on that issue advised that there were inconsistencies in the Report which could cast doubt on its conclusions and, in any event, dismissed them as "red herrings". Without deciding the question, it nevertheless seems to me that Mr Pappas' conclusion was valid and justified his advice that no response was needed.

20. However, the very fact that the Report did little to help the case of either party underlines the view I have formed that it was neither necessary nor helpful.

21. Having said that, I do not think it made the case more complex in any relevant sense but it did effectively add unnecessarily to the plaintiff's costs.

22. I consider therefore that whilst that enlivens s 184(1)(b) CL(W) Act it is more appropriate to apply s 183 to achieve the same objective.

23. I would, therefore, order that the costs of the plaintiff in considering and seeking counsel's advice on the "Report" so far as that advice related to that "Report" are to be excluded from the application of s 181.

24. The costs so excluded will include the costs of the argument before me as to the application of s 181.

I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Higgins.

Associate:

Date: 9 March 2007

Counsel for the plaintiff: Mr J Pappas

Solicitor for the plaintiff: Maliganis Edwards Johnson

Counsel for the defendant: Ms L Donohoe

Solicitor for the defendant: Sparke Helmore

Date of hearing: 6 February 2007

Date of judgment: 9 March 2007