Terranova v Joseph & Anor [2009] QCA 402


Their Honours McMurdo P and Holmes and Fraser JJA dismissed both the plaintiff’s appeal and the defendants ‘ cross appeal.

The contentious dispute involved the award of future economic loss of $112,301.53 discounted by 35% to $73,000.00 and standard costs.  Both the mandatory offer made pursuant to the Motor Accident Insurance Act 1994 (Qld) and the amount of an offer delivered under Pt 5 of Chapter 9 of the Uniform Civil Procedure Rules 1999 (Qld) (“the UCPR”) by the plaintiff, were less than the judgment.


His Honour Fraser JA delivered the leading judgment. In respect of economic loss and the discount  his Honour accepted the findings of credit in favour of the plaintiff. His Honour concluded:


[37] The defendants’ strongest argument was that the uncontentious facts cast doubt on the evidence accepted by the trial judge as justifying the future economic loss claim. The plaintiff had returned to full time work shortly after the accident; although she claimed to have reduced her working hours because of her pain, she had not lost any earnings between her return to full time work and when the trial was heard some four years later even though the medical evidence suggested that her injuries had stabilised; and she could produce evidence of only very limited expenditure on painkillers. Those facts do make it seem improbable that the plaintiff had suffered any substantial loss of working capacity or one which should be measured by reference to the loss of as many as 30 working days per year in addition to sick leave, weekends, holidays and the like. But that was what the trial judge found and the trial judge’s findings were necessarily influenced by her Honour’s assessment of the credibility and reliability of the oral evidence. There is no reason for thinking that the trial judge did not take into account the improbabilities in the oral evidence which were strongly advocated by the defendants. It must also be borne in mind that the trial judge’s apparently generous assessment based on the loss of 30 working days was tempered by her Honour’s selection of an unusually high discount rate of 35 per cent: I will return to that point.
[38] In the end, whilst some critical assertions in the oral evidence upon which the award for future economic loss was based seem improbable in light of the uncontentious facts, I cannot conclude that any of the relevant findings are falsified by “incontrovertible evidence”, are “glaringly improbable”, are contrary to “compelling inferences”, or otherwise are such as to justify this Court in setting aside the award for future economic loss.[29]


[41] As I have mentioned, the assessment of future economic loss referable to the loss of 30 working days every year seems too generous. On the other hand there is the counter-balancing error in the unjustifiably high discount rate of 35 per cent. Whilst the net award still seems generous in light of the uncontentious facts discussed earlier, the defendants have not made out a case for appellate correction of the trial judge’s findings of fact. In the result, in my opinion the award was not a “wholly erroneous estimate of the damage suffered” and nor would appropriate correction of it constitute that “substantial alteration in the whole award” which is necessary to justify appellate review.[31]


The decision in respect of the offer was considered by the trial judge a “close call” and was based on the evidence at trial being different to the case which the defendants at the time of the offers had to meet:


[45] The trial judge found that the defendant had established that an order for costs on the ordinary basis was more appropriate than an order for costs on the indemnity basis.[32] Her Honour accepted that whilst the quantum of the plaintiff’s future economic loss claim of $150,000 was made clear in the initial claim and statement of loss and damage, the finding in favour of the plaintiff as to her necessity to have time off work flowed essentially from the concessions made by Ms Johnson and Professor McPhee that she would need that time off work. Her Honour found that at the time of the offer the defendants’ legal representatives could not have foreseen a judgment based on that evidence, but instead would have formed the correct view on the evidence that the plaintiff was not restricted in her ability to continue to work. The trial judge said that the application was a “close call” but thought that on balance indemnity costs should not be awarded.



His Honour referred to:


[47] Relevant considerations were discussed in McChesney v Singh & Ors, where the Court observed[34] in relation to the cognate r 361 of the UCPR:

“Pursuant to r 361 of the UCPR the trial judge’s discretion is enlivened when “a party shows that another order for costs is appropriate in the circumstances.” In Castro v Hillery [2002] QCA 359; [2003] 1 Qd R 651, the Court of Appeal in considering the considerations relevant to the exercise of the discretion emphasised the need to consider whether the recipient of the offer has had an informed opportunity to assess the chances of either side doing better than the offer. This is to be assessed in the light of the circumstances as they existed at the time of the offer.

The appellant placed reliance on Morgan v Johnson [1998] NSWSC 367; (1998) 44 NSWLR 578, where the Court of Appeal of New South Wales had regard to the principles applicable to the exercise of the discretion under the analogous costs provisions of the District Court Rules 1973 (NSW), which mandated a consequence for not accepting an offer more favourable than the judgment awarded, “unless the Court otherwise ordered”. At 581-582 the Court set out the following principles as guiding the exercise of the discretion under the New South Wales rules:

(1) The purpose of the rule is to encourage the proper compromise of litigation, in the private interests of individual litigants and the public interest of the prompt and economical disposal of litigation;

(2) The aim is to oblige the offeree to give serious thought to the risk involved in non-acceptance;

(3) The prima facie consequence of non-acceptance will be that the rule will be enforced against the non-accepting party. This is because, from the time of non-acceptance “notionally the real cause and occasion of the litigation is the attitude adopted by [the party] which has rejected the compromise”.

(4) Lying behind the rule is the common knowledge that “litigation is inescapably chancy”. For this reason, the ordinary provision is expected to apply in the ordinary case. The mere fact that it was reasonable for the litigant to take the view that he or she did in rejecting the offer is not enough to displace the rule.”


His Honour concluded:


[53] The inherently risky nature of the claim for future economic loss doubtless informed the trial judge’s comment that the application under r 360 was a “close call”, but the discretionary decision not to award indemnity costs was justified by the relevant considerations which her Honour mentioned.


The President whilst concurring with his Honour Fraser JA stated:


[2] I wish only to add a brief observation in respect of the plaintiff’s appeal from the trial judge’s order that the defendants pay her costs on the standard basis. A decision as to the appropriate costs order involves discretionary considerations so that an appeal will only succeed if the costs order was unreasonable, clearly unjust, or it arose from an error of fact or law or failure to take into account a material consideration or from giving undue weight to any circumstance or matter: House v The King.[1] The plaintiff’s pre-trial offer to settle, which was considerably less than the judgment she obtained, means that under Uniform Civil Procedure Rules r 360 the court must order the defendants to pay her costs calculated on the indemnity basis, unless they show another order for costs is appropriate in the circumstances. As Fraser JA explains in his reasons, it was open to the trial judge to conclude that, at the time of the plaintiff’s offers to settle, the defendants’ legal representatives could not have foreseen a judgment in her favour based on the conclusion that she might suffer future economic loss because of a reduction in her working hours causing an equivalent pro rata reduction in the salary paid by her present employer. The trial judge recognised that this conclusion was a “close call”. I wish to emphasise that in the circumstances pertaining in this case, a judge could also properly have been determined that the defendants had not shown that an order other than for indemnity costs in favour of the plaintiff was appropriate.


Brisbane Barrister – David Cormack

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