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- Unreported Judgment
DISTRICT COURT OF QUEENSLAND
Faulkner-Mounsey v Baird & Anor (No. 2)  QDC 75
DONNA KATHLEEN FAULKNER-MOUNSEY
ANDREW JOHN BAIRD
6 May 2020
On the papers
Judge Horneman-Wren SC DCJ on the papers
J A S Ford (for the plaintiff)
D D Keane (for the defendants)
Craven Lawyers (for the plaintiff)
Twohill Lawyers (for the defendants)
- On 6 November 2019 the court gave judgment for the plaintiff on her claim for $28,530.00 for damages and $14,046.00 for interest. The plaintiff was also given judgment on the defendant’s counterclaim. I reserved the question of costs. The parties each filed written submissions, including submissions in reply by the plaintiff.
- For the reasons which follow, the defendants should pay the plaintiff’s costs of the proceeding on an indemnity basis.
The course of the proceedings
- The plaintiff’s action was commenced by Claim and Statement of Claim filed in the Magistrates Court on 18 April 2017. She claimed $38,681.34 as damages for the repudiation and breach of a lease, interest and costs. On 22 May 2017 the plaintiff was given judgment in default of the defendants filing a notice of intention to defend. The defendants applied to have the default judgment set aside. They were successful and an order setting aside the judgment was made on 5 June 2017. On 19 June 2017 the defendants filed a Defence to the plaintiff’s claim and counterclaimed for damages in the sum of $39,500.00, interest and costs.
- The plaintiff filed an Amended Statement of Claim on 4 July 2017. The amount claimed for damages was slightly reduced; from $38,681.34, as originally claimed, to $38,286.71. A Reply and Answer to the Defence and Counterclaim was filed on the same day.
- The defendant filed an Amended Defence and Counterclaim on 17 July 2017. The amount of damages counterclaimed remained the same. On 20 July 2017, the plaintiff filed an Amended Reply and Answer and a Further Amended Statement of Claim. Under the latter, the amount for damages as originally claimed was reinstated.
- On 13 December 2017, the plaintiff filed a Third Amended Statement of Claim in which the following was pleaded as a new paragraph 7A:
“7A The lease required at Schedule Clause 5(f)(v) that the lessee pay to the lessors [sic] legal costs on a solicitor and own client basis in relation to any breach by the lessee of the terms of the lease resulting in enforcement action taken by the lessor”.
- The prayer for relief was amended to claim:
4. Costs on a solicitor and own client basis in accordance with Schedule Clause 5(f)(v) of the lease”.
- On 18 December 2017 the defendants filed a Further Amended Defence and Counterclaim in which amendments were made to both the Defence and Counterclaim. The defendants did not plead to paragraph 7A of the Third Amended Statement of Claim. The allegation is taken to be admitted. The amount claimed under the Counterclaim remained $39,500.00.
- Then, on 28 February 2018, the defendants filed another Further Amended Defence and Counterclaim. Again, the defendants did not plead to paragraph 7A of the third Amended Statement of Claim. The Counterclaim was substantially amended. Of particular note, paragraph 27 was replaced and new paragraphs 27A to 27J were added. Those paragraphs pleaded: the defendants’ three-year plan; the communication of that plan to the plaintiff; and the plaintiff’s knowledge of the defendants’ intention to enter the lease on that basis. It was on that basis that the amount of the defendants’ Counterclaim was amended from $39,500.00 to $575,110.43.
- The plaintiff’s Further Amended Reply and Answer to that pleading was filed on 6 April 2018.
- On 30 May 2018 the plaintiff applied to the court for a number of orders including the provision by the defendants of further and better particulars and the striking out of a number of paragraphs of the Amended Defence and Counterclaim, including several concerning the alleged three-year plan for reasons including that the plan had not been disclosed.
- On 11 June 2018 the defendants applied for the following orders;
“1. That the plaintiff’s application filed on 30 May 2018 be dismissed;
2. That the proceedings number M102/17 in the Ipswich Magistrates Court be transferred to the Ipswich District Court;
3. That the plaintiff pay the defendants’ costs of and incidental to the application.
- On 12 June 2018 the Magistrates Court made a consent order requiring the defendants to provide certain further and better particulars, that the words “and converted the six head of cattle” be struck out of paragraphs 2E and 23D of the Amended Defence and Counterclaim and (purportedly) that the matter be transferred to the Ipswich District Court. This transfer of proceedings is a matter to which I shall return.
- The defendants were also ordered to pay the plaintiff’s costs of the application.
- From that time the proceeding continued in this Court.
The plaintiff’s offers to settle
- On 12 June 2017 the plaintiff made an offer under Chapter 9, Part 5 of the Uniform Civil Procedure Rules. The offer was to settle “the current proceedings, including any Counterclaim” on payment by the defendants to the plaintiff of $27,000.00 in satisfaction of the plaintiff’s claim and costs fixed in the sum of $1,423.00, being a total of $28,423.00. That offer pre-dated the filing of any Defence and Counterclaim by the defendants.
- That offer was rejected by the defendant on 20 June 2017, the day following the filing of their Defence and Counterclaim.
- On 21 December 2017 the plaintiff made a further offer under Chapter 9, Part 5 of the UCPR. Again, it was an offer to settle “the current proceedings, including any counterclaim”. It offered to settle the proceedings on payment by the defendants to the plaintiff of $27,000.00 in satisfaction of the claim and costs on a solicitor and own client basis pursuant to Clause 5(f) of the lease in the sum of $25,874.00, being a total of $52,874.00.
- There is no evidence of the defendants having rejected that offer, however, it lapsed after 14 days in accordance with its terms.
Relevant statutory provisions
- Rule 360 of the Uniform Civil Procedure Rules provides:
“Costs if offer by plaintiff
- If —
- (a)the plaintiff makes an offer that is not accepted by the defendant and the plaintiff obtains an order no less favourable than the offer; and
- (b)the court is satisfied that the plaintiff was at all material times willing and able to carry out what was proposed in the offer;
- the court must order the defendant to pay the plaintiff’s costs calculated on the indemnity basis unless the defendant shows another order for costs is appropriate in the circumstances.
- 2.If the plaintiff makes more than 1 offer satisfying subrule (1), the first of those offers is taken to be the only offer for this rule.”
- Rule 681 provides:
“681 General rule about costs
- (1)Costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court orders otherwise.
- (2)Subrule (1) applies unless these rules provide otherwise.”
- Rule 688 provides:
“688 Costs when proceeding removed to another court
- (1)This rule applies if a proceeding is removed to the court from another court or tribunal (the first court).
- (2)In relation to the proceeding—
- (a)if the first court has not made an order for costs, the court may make an order for the costs of the proceeding, including the costs before the removal; and
- (b)any order for costs made by the first court may be assessed and enforced as if it were an order to the court.
- (3)Unless the court orders otherwise, the costs up to the time of the removal must be assessed on the scale applying in the first court.”
- Section 29 of the Civil Proceedings Act 2011 provides:
“29 Transfer because counterclaim beyond jurisdiction
- (1)This section applies if a party to a proceeding in a court (the relevant court) files a counterclaim for relief not within the relevant court’s jurisdiction.
- (2)A court having jurisdiction for the counterclaim may order that—
- (a)all of the proceeding be transferred to that court; or
- (b)the counterclaim be transferred to that court; or
- (c)all of the proceeding be heard and decided by the relevant court.
- (3)If an order is made under subsection (2), the registrar of the court that made the order must give a copy of it to the registrar of the relevant court.
- (4)If an order is made under subsection (2)(b)—
- (a)the relevant court must hear and decide the balance of the proceeding; and
- (b)unless the court hearing the counterclaim orders otherwise, enforcement of any judgment in relation to the balance of the proceeding is stayed until judgment is given in relation to the counterclaim.
- (5)Despite any other Act or law, the relevant court is taken to have jurisdiction to hear and decide all of the proceeding if—
- (a)no application is made for an order under subsection (2)(a) or (b) within 14 days after the counterclaim is served on the other party or parties to the proceeding; or
- (b)an order is made under subsection (2)(c).
- Section 33 provides:
- (1)This section applies if a proceeding is transferred under this part.
- (2)Unless the court orders otherwise, costs are in accordance with the scale of costs for the court in which the proceeding was pending when the costs were incurred.”
The parties’ contentions on indemnity costs under the Uniform Civil Procedure Rules
- The plaintiff contends that the judgment in her favour was clearly more favourable than the offer to settle made in June 2017. On that basis, the court must order the defendants pay the plaintiff’s costs unless the defendants show another order for costs is appropriate in the circumstances. She submits there is no basis to depart from r 360(1) in circumstances in which her rights were “clearly vindicated at trial”. In that regard, she refers to the primary judgment describing allegations key to the defence and counterclaim as being glaringly improbable and requiring pure speculation if they were to be found.
- She submits that, pursuant to r 688(2) of the UCPR the costs order should specify the defendants pay her costs including those before removal of the proceedings to the District Court.
- The defendants do not dispute that they should pay the plaintiff’s costs; only the basis upon which those costs should be paid. They accept that the plaintiff’s offer of 12 June 2017 was, in terms of r 360(1), in terms more favourable to them than the judgment.
- However, they contend that another order for costs is appropriate in the circumstances, that other order being that they pay the plaintiff’s costs of the plaintiff’s claim on the Magistrates Court scale on the standard basis and her costs of their counterclaim on the District Court scale on the standard basis.
- They submit it is not an appropriate matter for an award of indemnity costs and that the plaintiff’s claim being within the monetary jurisdiction of the Magistrates Court, they should be paid on the scale of that court. The defendants submit that because the judgment obtained could have been awarded by the Magistrates Court, r 697(2) requires costs to be assessed as if the proceeding had been started in the Magistrates Court, unless the court orders otherwise.
- They submit that pursuant to r 688(3) of the UCPR the costs prior to transfer of the proceedings to this court should be paid on the Magistrates Court scale.
- They contend that there are two bases upon which the court would not make an order for indemnity costs in the circumstances of this case. First, they contend that another order is appropriate, submitting that the June offer needs to be evaluated at the time at which it was made and that the circumstances at that time were substantially different to what they were at the time of the trial. Particularly, they point to the fact that at the time the offer was made the plaintiff had been charged with stealing their cattle and that she was not acquitted until 15 September 2017 and, further, that their counterclaim had not been articulated at the time of the offer.
- The second basis advanced for it not being appropriate to award indemnity costs is that there is no evidence that the plaintiff was willing and able to carry out the proposed offer.
A preliminary issue – the transfer of the proceedings
- Before turning to consider the parties submissions on indemnity costs under the UCPR, a preliminary issue must be addressed; the application for the transfer of the proceedings was made to the Magistrates Court. The consent order was purportedly made by the Magistrates Court. There was no jurisdiction in that court to do so.
- As set out above, s 29(2) of the Civil Proceedings Act 2011 confers jurisdiction on the court having jurisdiction for the counterclaim to make an order transferring the proceedings, or the counterclaim, to that court. In this case, that was the District Court. An application ought to have been made by way of an originating application to the District Court, not an application within a proceeding to the Magistrates Court. An application not having been made to the District Court within 14 days of 28 February 2018, being the date upon which the defendants’ Further Amended Defence and Counterclaim counterclaiming an amount beyond the monetary jurisdiction of the Magistrates Court was filed, by operation of s 29(5)(a) of the Civil Proceedings Act the Magistrates Court was taken to have jurisdiction to hear and decide all of the proceeding, including the Counterclaim.
- No provision of the Civil Proceedings Act nor the UCPR conferred power upon the Magistrate Court to transfer the proceeding to the District Court as it purported to do on 12 June 2018. That order was made without jurisdiction.
- The proceeding’s continuation in this court, including the trial and the delivery of the court’s primary judgment, occurred in circumstances in which the proceeding had not properly been brought before the court. However, in my view, that state of affairs is curable. An order under s 29(2)(a) of the Civil Proceedings Act 2011 can be made by this court nunc pro tunc with effect from 12 June 2018. Section 29 does not create the jurisdiction of the District Court to deal with the proceeding. That jurisdiction is created by s 68 of the District Court of Queensland Act 1967. Section 29 of the Civil Proceedings Act merely provides a means by which a proceeding commenced in another court may be brought into the District Court so as to exercise the jurisdiction which the court has to deal with the matter.
- In Emanuele v Australian Securities Commission, Toohey J observed:
“The first record of an order nunc pro tunc seems to be one made by Lord Clarendon in Ex Parte Robert Devenish & Henry Devenish v Richard Bernford, per Pet, a private case thereafter the use of an order nunc pro tunc is well recorded in judicial decisions. In Donne v Lewis, Lord Eldon said:
‘The court will enter a decree nunc pro tunc, if satisfied from its own official documents, that it is only doing now what it would have done then.”
- In the same case, Kirby J said:
“It is trite to say, but worth repeating, that the power of a court, such as the Federal Court, to correct obvious slips by orders in appropriate cases nunc pro tunc is one granted by legislation and the rules and implied in the express powers of the court to avoid injustice. There is a reason for the tendency in the series of cases cited by McHugh JA in Woods v Bate (1986 7 NSWLR 560 at 567) and in other cases to like effect, for the reluctance of courts in recent times to invalidate acts done pursuant to a statutory provision because of a failure to comply with a procedural condition. Courts today are less patient with meritless technicalities. They recognise the inconvenience that can attend an overly strict requirement of conformity to procedural preconditions. In the morass of modern legislation, it is easy enough, even for skilled and diligent legal practitioners (still more laypersons who must conform to the law) to slip in complying with statutory requirements.
… An undue rigidity in insisting upon strict compliance with all of the procedural requirements of the law could become a mask for injustice and a shield for wrongdoing. Against that risk, courts generally retain the facility to cure slips and repair oversights in proceedings before them, in appropriate cases where justice requires it.”
- Later, Kirby J went on and said:
“The requirement of the court’s leave is there for the superintendence of the proceedings by the court. At least in the case of the superior court of records such as the Federal Court, it is available, retrospectively, to sanction the court’s own proceedings. The missing ingredient was a step by the court itself which, if justice required it, could, exceptionally, be ordered retrospectively by a nunc pro tunc order.”
- Here, what was missing was the order by this court affecting the transfer purportedly affected by the Magistrates Court. This court is able to sanction the proceedings conducted within in it which followed. In my view, had an originating application been made to this court in June 2018 seeking the transfer to it of the proceeding pursuant to s 29(2)(a) of the Civil Proceedings Act that order would undoubtedly have been made. Presumably, although applied for by the defendants, the plaintiff would have consented to the order as she purported to do in the Magistrates Court. The parties have conducted the proceeding since that time as though it had properly been brought within the jurisdiction of this court. A nunc pro tunc order should be made.
Consideration of indemnity costs under the UCPR
- Perhaps as a corollary of neither party having turned their attention to s 29 of the Civil Proceedings Act, neither party’s written submissions addressed s 33 of that Act. As set out above, it prescribes that unless the court orders otherwise, costs are in accordance with the scale for the court in which the proceeding was pending when the costs were incurred, and that this court can make an order about the costs in the Magistrates Court prior to transfer, save for any in respect of which an order has already been made.
- In my view, the defendants have not shown that another order, that is an order other than that they should pay the plaintiff’s costs on an indemnity basis, is appropriate in the circumstances.
- Although made to the incorrect court for reasons already explained and although made with the consent of the plaintiff, it was the defendants who applied for the transfer. In an affidavit filed in support of the application to transfer the first defendant deposed:
“The issues involved in these proceedings are complicated in that they involve a very specialised industry. It is not possible to produce on demand exact details when requested. It is my intention to have this matter determined by a court as soon as possible.
The value of my counterclaim exceeds the monetary jurisdiction of the Magistrates Court and I respectfully request this honourable court transfer these proceedings to the District Court of Queensland at Ipswich for hearing.”
- The entire basis for the proceeding to be in this court was the defendants’ counterclaim for $575,110.43 in respect of which they have been wholly unsuccessful. As stated in the primary judgment, the defendants abandoned the expert evidence upon which proof of the amount counterclaimed was based. They failed to prove the three-year plan upon which it was based and Mr Baird gave evidence himself which disproved the pleaded communication of the plan to the plaintiff, a matter upon which the counterclaim also depended.
- The matters to which the defendants point as warranting a departure from the order for indemnity costs which would otherwise be required to be made do not alter the circumstances by which the proceeding came to be in this court. The fact that at the time at which the offer was made the plaintiff had been charged with stealing the defendants’ cattle, an offence of which she was ultimately acquitted, is not to the point. Nor is it to the point that their wholly unsuccessful counterclaim had not, by then, been articulated. As the reasons set out in the primary judgment establish, neither of those matters make any more reasonable the defendants’ rejection of an offer by the plaintiff to settle what were, apart from the misconceived counterclaim, fairly simple proceedings.
- As to the suggested lack of evidence as to the plaintiff’s ability to perform the offer, that also provides no basis for a departure from the requirement for the defendants to pay indemnity costs otherwise established by r 360(1). The defendants cite the judgment of Dalton J in Reid & Anor v Stephens Luxury Homes Pty Ltd (No. 2). At paragraph  of her reasons for judgment, her Honour said that although satisfied that an offer had been made, that the defendant did not accept the offer and that the judgment was more favourable than the settlement proposed by the terms of the offer, “there is no material whatsoever before me as to the matters about which I need to be satisfied pursuant to r 360(1)(b) of the UCPR”. Her Honour said that in those circumstances she would not make an order for indemnity costs. Her Honour’s reasons do not disclose what the terms of the offer were or whether there was anything about them which would call into question the plaintiff’s willingness or ability to carry them out.
- In this matter, the terms of the offer were simply to accept a sum of money to settle the proceedings including any Counterclaim, and, once accepted, to prepare a consent judgment to be filed. The plaintiff’s willingness to settle on those terms is to be inferred from the offer itself. There is nothing to cause one to doubt the plaintiff’s ability to carry out those terms. By its terms, and by operation of r 355(1) of the UCPR, it was open for acceptance for 14 days and could not be withdrawn during that period without the court’s leave.
- I do not consider Dalton J’s judgment to be authority for a requirement for there to be evidence of such matters before the court before it may make an order for indemnity costs under r 360. As the authors of Civil Procedure Queensland note, “having regard to the fact that an offer to settle may not be withdrawn during the period specified in the offer without the court’s leave rule 355(1), it will generally be unnecessary to have regard to this requirement” and “in the case where the plaintiff simply seeks some money judgment, there will ordinarily be no issue as to the plaintiff’s ability to carry out the offer by accepting payment and discontinuing the action”.
- In my view, those notes to r 360 aptly apply to this matter.
- The defendants raise nothing which suggests any lack of willingness or ability on the part of the plaintiff to carry out the terms of the offer. They simply point to an absence of any evidence from the plaintiff to that effect. This submission should be rejected.
- For all of the foregoing reasons, this is a case in which the effect of r 360(1) should not be displaced. The defendants should be ordered to pay the plaintiff’s costs on an indemnity basis. Applying s 33 of the Civil Proceedings Act 2011 and r 688 of the UCPR that should be on the Magistrates Court scale up until 12 June 2018; the date of transfer of the proceedings to this court. Thereafter, costs should be on the District Court scale. The costs order in this court should exclude any costs the subject of the Magistrates Court order of 12 June 2018.
- On the view that I have taken concerning the Plaintiff’s entitlement to an indemnity costs order under the UCPR, it is unnecessary to consider her claim for an award of solicitor and own client costs under the lease.
- Order nunc pro tunc pursuant to s 29(2)(a) of the Civil Proceedings Act 2011 that proceeding no. M102/17 in the Ipswich Magistrates Court be transferred to the District Court of Queensland from 12 June 2018.
- The defendants pay the plaintiff’s costs of and incidental to the proceeding on an indemnity basis:
- (a)on the Magistrates Court scale G to 12 June 2018 (excluding any costs the subject of the order of 12 June 2018); and
- (b)on the District Court scale from and including 13 June 2018.
 Rule 166(1)(a) of the Uniform Civil Procedure Rules 1999.
 And some costs earlier thrown away at a settlement conference in November 2017.
 Rule 355(2) of the Uniform Civil Procedure Rules.
 Emanuele v Australian Securities Commission (1997) 188 CLR 114.
 Ibid at 132.
 Beames, General Orders of the High Court of Chancery (1815) pp 290-291, which dates the order as 4 December 1691, see also Harrison & Leach, Seton on Decrees (1862), Vol 2, p 1137. (Original footnote).
 See e.g., Williamson v Henshaw (1747) Dickens 129 [21 ER 217]; Jesson v Brewer (1673) Dickens 370 [21 ER 312]; Lawrence v Richmond (1820) 1 JAC & W 241 [37 ER 367]; Re Jones  WN 114. (Original footnote).
 (1805) 11 VES JUN 601 at 601 [32 ER 1221 at 1222]. (Original footnote).
 Ibid supra at 152-153.
 At 157.
 Affidavit of Andrew John Baird filed 11 June 2018, paras 15 to 16.
  QSC 231 .
 Lexis Nexus, Butterworths, Australia 1991 at [r 360.30] and [r 360.35].
- Published Case Name:
Donna Kathleen Faulkner-Mounsey v Andrew John Baird and Katrina Baird (No 2)
- Shortened Case Name:
Faulkner-Mounsey v Baird (No 2)
 QDC 75
06 May 2020