Key takeaway points
- UCPR offers are a powerful tool to help resolve proceedings in Queensland and to otherwise provide a basis to argue for more advantageous costs orders than might otherwise apply. Careful drafting is required.
- To be effective an offer must address all aspects of the claim, leaving no need for further negotiations between the parties.
- Where an amount yet to be assessed is to be included, there needs to be an agreement to pay the amount and, failing agreement, a method for assessment in order for a UCPR offer to be valid.
Overview
When a party wins in court, the general rule is that the losing party pays their costs, assessed on scale, unless a court orders otherwise. Offers made pursuant to the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) can be a powerful tool to enable the court to otherwise order, namely to award a higher basis of assessment of costs for plaintiffs or order that the winning plaintiff bear their own costs and pay the defendants costs from the date of the offer.
When drafting, care must be taken not just on the amount of any offer, but as to the terms, scope, and form of the offer in order for the benefits of the UCPR offer to be realised.
In Stewart v Metro North Hospital and Health Service (No 2) [2024] QSC 95 the Queensland Court of Appeal has clarified that for an offer pursuant to the UCPR to be effective, in addition to meeting the other requirements, it must settle the whole of a parties claim. In that case the Court held that the defendant’s offer was an invalid UCPR offer as it attempted to only settle some of the issues in dispute.
The issue
The plaintiff, Mr Stewart (the plaintiff) commenced proceedings against Metro North Hospital and Health Service (the defendant) following treatment by the defendant, which resulted in the plaintiff suffering injuries, including brain damage.
On 20 March 2024, the primary Judge gave judgment against the defendant in favour of the plaintiff for damages in the sum of $2,190,505.48, plus management fees to be assessed.
An offer was made by the defendant on 17 July 2023 in the sum of $3,000,000 for primary damages inclusive of interest and statutory refunds, plus reasonable fund management and administration fees to be agreed following resolution of primary damages, along with standard costs of and incidental to the claim including the application for sanction to be agreed, or failing agreement to be assessed according to the UCPR.
The defendant sought to rely on this offer as having been more favourable than the result obtained by the plaintiff and sought an order that it pay the plaintiff’s costs up until the date of the offer and afterwards that the plaintiff pay the defendant’s costs on the indemnity basis.
The primary judge found that in order to be compliant and to trigger the defendant’s entitlement to seek its costs as claimed, the offer under r 353 may not offer to settle only part of a cause of action or claim for relief. The court found that as the offer excluded management fees it was not an offer to settle the whole of the damages claim.
As r 353 did not apply, and pursuant to the Court’s general power on costs, the primary judge ordered that the defendant pay the plaintiff’s costs of the proceeding up to and including 17 July 2023, and that there be no order for costs after that date.
The Court of Appeal’s decision
On 7 June 2024, the defendant was granted leave to appeal the decision regarding costs incurred after 17 July 2024 (the date of the offer).
The defendant submitted that the primary judge erred in finding that the meaning of “offer” in r 353(1) of the UCPR was limited to only offers capable of settling the whole of the claim. In the alternative, the defendant submitted that the primary judge erred in finding that its offer did not comply with Rule 353.
The Court of Appeal found that an offer to settle must relate to the claims in the proceeding per r 353. A claim is a cause of action or claim for relief. In the present case a claim for damages for negligence was only one cause of action.
The Court of Appeal found that a claim to settle only some heads of damage related to that cause of action does not comply with r 353 because under the plaintiff’s offer the management fees were to be dealt with separately by means of further agreement between the parties (which may ultimately not have been agreed and have required the Court to resolve the assessment).
Outcome
The Court of Appeal found that the plaintiff’s offer did not comply with r 353 of the UCPR. Accordingly the plaintiff was not entitled to its costs following the date of the offer.
As to the form of offers, the Court also found that including an unquantified amount, that is agreed to be paid and quantified pursuant to a mechanism to determine quantum of part of a claim, absent agreement, is valid as a party has agreed to pay subject to that assessment.
Accordingly, the error by the plaintiff here was in expressing the management fees as a separate item ‘to be agreed’ – meaning it reserved its position on whether it would be willing to settle on those fees and in what amount. Had it settled the claim for those costs ‘to be agreed, or if not agreed then assessed’, along with an appropriate mechanism for the assessment, it is likely the offer would have been valid as it would have settled all claims finally.
Next steps
UCPR offers are a powerful and very useful tool in litigation, however a knowledge of the rules and careful drafting is required. For assistance, contact our Disputes experts who have extensive experience resolving commercial disputes.
