PIPA costs – when the plaintiff's liability arguments fail to impress the court

This recent Queensland District Court decision considered a defendant's ability to recover costs of a claim brought pursuant to the provisions of the Personal Injuries Proceedings Act 2002 (PIPA) against an unsuccessful plaintiff.

Facts

The plaintiff alleged sustaining personal injury to his left ankle whilst inspecting a rural property and business chattels which he had agreed to purchase. At all material times the defendants (self-represented) were the registered owners of the property.

Justice Dorney QC found that the defendants were not liable for what occurred. The court is of course required to assess quantum in any event, and it was assessed in the sum of $49,665.40.

The mandatory final offers exchanged at the pre-proceedings stage were nil and $80,000 on behalf of the defendants and the plaintiff respectively. The court looked separately at issues of costs in respect of the PIPA pre-proceedings stage, and the litigated stage of the claim.

Decision

Pre-proceedings costs

The plaintiff noted that section 40(8) of PIPA required that "the court must, if relevant, have regard to the mandatory final offers in making a decision about costs." The plaintiff then had reference to section 56 of PIPA which prescribes orders which can be made in relation to costs where "a court awards an amount equal to the upper offer limit or less in damages". The relevant upper offer limit (prescribed by the Regulations) for the purposes of these proceedings was $50,000.

Section 56(3)(c) provides:

... if the amount awarded is equal to, or less than, the respondent's, or the respondents', mandatory final offer, costs are to be awarded on the following basis:

• costs up to the day on which the proceeding started are to be awarded to the claimant on a standard basis up to the declared costs limit
• costs on or after the day on which the proceeding started are to be awarded to the respondent or respondents on a standard basis.

Noting the quantum which would have been assessed if the plaintiff was successful ($49,665.40), the plaintiff argued that section 56(3)(c) applied to require costs to be paid for the pre-proceedings stage to the applicable "declared costs limit" of $2,500.

Justice Dorney cited the decision of the Court of Appeal in Amos v Brisbane City Council [2006] 1 Qd R 300, which found that the words of section 56(1) which deal with an award of damages are "quite incapable of accommodating an order dismissing a proceeding, with or without an assessment of damages", and that section 56 says "nothing about costs in cases where there is no award of damages". Reading this section in conjunction with the decision in Amos, Justice Dorney was satisfied that section 56 had no application to the proceedings to hand, as liability had not been found against the defendant.

Justice Dorney noted that the Uniform Civil Procedure Rules 1999 (UCPR) does not provide the court with the power to make an award for costs incurred prior to the commencement of court proceedings, and as such no consideration could be undertaken of the costs incurred at the pre-proceedings stage up to the day on which the claim and statement of claim was filed in the court.

Costs of litigated proceedings under UCPR

Although the plaintiff pursued her proceeding in the District Court, she argued that the applicable Magistrates Court scale of costs ought to be applied given that the court notionally assessed damages within the jurisdictional limit of the Magistrates Court. Unsurprisingly, Justice Dorney found that given the plaintiff had brought the defendants into the costs regime of the District Court by commencing her proceeding there, this argument could not be sustained.

It was ordered that the plaintiff pay the defendant's costs of the court proceeding, to be assessed on the standard basis. In making this order Justice Dorney cautioned that the defendants, being self-represented, were likely to recover very little from their claimed $39,545.50, as such expenses were largely unlikely to fall within the correct legal characterisation of recoverable costs.

Implications

This decision serves as a useful reminder to defendants that the costs incurred in completing the legislated PIPA pre-proceedings steps will not be recoverable in circumstances where the claim is ultimately dismissed by the court. This outcome is particularly unsettling, as it essentially disadvantages those defendants willing to challenge strong liability cases. For this reason it is generally advisable to adhere to the legislated time frames and (where compromise is not possible) to proceed to litigate strong liability cases at the earliest appropriate time, and seek to place additional pressure upon a plaintiff with a weak liability case by way of formal offer/s pursuant to the UCPR.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.