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  • Unreported Judgment

Treton Pty Ltd v HM Australia Holdings Pty Ltd (No 2)

 

[2011] QSC 78

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO/S:

Trial Division

PROCEEDING:

Claim – Further Orders

ORIGINATING COURT:

DELIVERED ON:

11 April 2011

DELIVERED AT:

Brisbane

HEARING DATE:

21 March 2011

JUDGE:

McMurdo J

ORDER:

On the claim against the first defendant, the first defendant pay to the plaintiff its costs of the proceedings.

On the claim against the second defendant, there be no order as to costs.

CATCHWORDS:

PROCEDURE – COSTS – GENERAL RULE - COSTS FOLLOW THE EVENT – CO-DEFENDANTS – where the plaintiff was granted specific performance and damages against the first defendant – where the plaintiff’s claim against the second defendant was dismissed – where joinder of the second defendant was reasonable – whether costs should follow the event – whether the conduct of the first defendant made it fair to impose some liability on it for the costs of the second defendant

PROCEDURE – JUDGMENTS AND ORDERS – AMENDING, VARYING AND SETTING ASIDE – GENERAL RULES – where the plaintiff’s claim against the second defendant was dismissed – where the second defendant sought orders varying the principal judgment so that the claim against it is dismissed only in relation to certain paragraphs – whether the order dismissing the claim against the second defendant should be varied under r 667 of the Uniform Civil Procedure Rules 1999 (Qld)

Uniform Civil Procedure Rules 1999 (Qld), r 660, r 667

Foran v Wight (1989) 168 CLR 385, cited

Gould v Vaggelas (1984) 157 CLR 215, applied
Laird v Pim (1841) 7 M&W 474; 171 ER 852, cited
Mantonella Pty Ltd v Thompson [2009] QCA 80, cited
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, cited
Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235, cited
Steppke v National Capital Development Commission (1978) 39 LGRA 94; 21 ACTR 23, applied
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245, cited

COUNSEL:

D O’Sullivan for the plaintiff
KL Forman (sol) for the defendants

SOLICITORS:

McInnes Wilson for the plaintiff
Cooper Grace Ward for the defendants

[1] In my judgment delivered on 21 March 2011, I upheld the plaintiff’s case against the first defendant and ordered that there be a decree of specific performance of each contract of sale, together with damages in addition to specific performance in the sum of $35,499.49 with interest.  I dismissed the claim against the second defendant.  I asked the parties to deliver written submissions in relation to costs and other orders. 

[2] There is no contest as to costs between the plaintiff and the first defendant.  They should follow the event and the first defendant will be ordered to pay the plaintiff’s costs against it upon the standard basis. 

[3] The position between the plaintiff and the second defendant is not so straightforward.  The plaintiff submits that it did not fail against the second defendant, because part of its claim against her was not determined by my judgment.  The plaintiff goes further, submitting that there should be orders to “clarify its rights in that regard”.  In effect it seeks to have the judgment varied, so that its claim against the second defendant is dismissed only in relation to certain paragraphs of the Amended Claim.

[4] Rule 667(1) of the Uniform Civil Procedure Rules 1999 (Qld) provides that the Court may vary or set aside an order before the earlier of the filing of the order or seven days after the making of the order.  The order in question, which is that the plaintiff’s claim against the second defendant be dismissed, was made when it was pronounced and took effect from that date:  r 660(1), (2).  Accordingly, the order could not be set aside now under r 667(1). 

[5] Rule 667(2) permits the Court to set aside an order at any time in one of the circumstances there described.  None of those circumstances appears to exist here.  In particular, as I will explain, the order did reflect the Court’s intention at the time the order was made, so that r 667(2)(d) would not apply.

[6] In my judgment I described the plaintiff’s case against the second defendant as being in the alternative to that against the first defendant.  I said that the claim against her was upon the premise that the contracts of sale had been validly terminated by the purchaser.  In saying that, I was repeating what the plaintiff’s counsel had said in opening their case:[1]

 

“Your Honour, there are two claims before the Court that are brought by the plaintiff.  The first is a claim for specific performance of, I should say, two contracts.  …

So that’s the first claim, specific performance.  The second claim is an alternative claim and it’s this:  if the plaintiff succeeds in its specific performance claim it does not need to rely upon the second claim, but if it doesn’t succeed and it’s found by your Honour that the contracts were validly terminated, then the plaintiff seeks to recover its loss under an indemnity and guarantee from the second defendant, and that’s a separate claim, alternative.”

I was also repeating what was in a written outline of the plaintiff’s case,[2] where this appeared:

 

“3.There are two main issues in the proceedings.  The first is the claim by Treton against HM Australia for specific performance.  The second is the claim, in the alternative, for recovery of loss against Lu under a guarantee and indemnity.”

[7] Nothing was said during the trial to qualify that explanation of the case against the second defendant.  In particular, there was no argument as to whether the plaintiff should recover any amount from the second defendant in the event that it succeeded in obtaining a decree of specific performance against the first defendant.

[8] At the end of the trial the parties made oral and written submissions.  The plaintiff’s extensive written submissions began as follows:

 

“1.There are two claims before the Court. 

2.The first is a claim for specific performance by the plaintiff against the first defendant

3.The second claim is made by the plaintiff in the alternative.  Should the first defendant’s termination be found to be valid the plaintiff seeks to recover its loss in value of the land in question plus its holding costs pursuant to a guarantee and indemnity provided to it by the second defendant.”

Those two claims were then the subject of separate written submissions.  Under the heading “The first claim:  specific performance” were paragraphs 12 through 155.  Paragraphs 152 through 155 appeared under the sub-heading “Orders sought as to specific performance”.  Then under the heading “Second claim:  deed of guarantee and indemnity”, the written submissions commenced as follows:

 

“156.The second main issue in the case is the liability of the second defendant (‘Lu’) under the deeds of guarantee and indemnity which were in identical terms and were at Annexure E to each contract.

157.If it were found that the contracts were validly terminated, then the plaintiff seeks to recover its losses as a result of the non-completion of the contracts from Lu under the terms of these deeds.”

The written submissions under this heading comprised those paragraphs as well as others through to and including paragraph 194, in which under a sub-heading “Order sought as to indemnity”, it was submitted that there should be an order that the second defendant pay to the plaintiff the sums set out in an annexure to those submissions.  That is the annexure to which I referred in my principal judgment.[3]

[9] However, there was one other part of the plaintiff’s written submissions which was relevant to the present question.  This paragraph, which was not the subject of any oral submissions, was paragraph 155 under the heading “Order sought as to specific performance” and in these terms:

 

“155.In addition, Treton seeks an order enforcing Lu’s guarantee of HM Australia’s obligations under the contracts for lots 10 and 11, as set out in paragraphs 9 to 11 and 14 to 16 of the Claim.”

I go then to those paragraphs of the Claim. 

[10] Paragraphs 9 to 11 of the Claim were as follows:

 

“9.A declaration that the Second Defendant is obliged to pay to the Plaintiff all sums due and payable by the First Defendant to the Plaintiff under a contract for the purchase of land styled Lot 10, Southlink Business Park, and dated 14 March 2008.

10.A declaration that the Second Defendant is liable to indemnify the Plaintiff in respect of all loss and damage that the Plaintiff has suffered by reason of the First Defendant’s breach of contract in failing to complete a contract for the purchase of land styled Lot 10, Southlink Business Park, and dated 14 March 2008.

11.An order for the payment of such sums.”

Paragraphs 14 to 16 of the Claim were identical, except that they referred to the contract for lot 11. 

[11] It is necessary to go to the relevant paragraphs of the statement of claim.  Paragraph 41 pleaded that the second defendant was liable to pay money to the plaintiff in respect of lot 10 as follows:

 

“(a)The sum of $1,735,592 plus interest payable by HM Australia to Treton in relation to Lot 10, as particularised in paragraph 2 of the Claim;

(b)The damages payable by HM Australia to Treton in relation to Lot 10, as particularised in paragraph 34 above;

(c)In the alternative to sub-paragraph (a) and (b), the damages particularised in paragraph 35 above;

(d)The whole of Treton’s legal and other fees and disbursements incurred in and about these proceedings and otherwise in and about enforcement of the contract for the sale of Lot 10, without deduction.”

Paragraph 45 of the statement of claim was in the same terms but in relation to lot 11 and claimed in subparagraph (a) the sum of $1,427,800 plus interest.  It is sufficient then to discuss those various allegations in relation to lot 10.

[12] The plea in paragraph 41(a) was that the second defendant was then liable to pay to the plaintiff the entire purchase price, together with interest calculated in accordance with the contract.  The payment of those amounts was claimed against the first defendant, but only as elements of an order for specific performance.  There was no pleaded case that there was a debt presently due and owing by the first defendant to the plaintiff for the price, notwithstanding that there had been no conveyance.  That was unsurprising, because the contract provided that the balance of the purchase price was to be paid in exchange for, amongst other things, an executed transfer capable of immediate registration.  Absent a clear agreement to the contrary (which did not exist here), the plaintiff was not entitled to sue its purchaser for the purchase price as a debt:  rather it was entitled to sue for specific performance, or for damages for the loss of its bargain:  Laird v Pim;[4] McDonald v Dennys Lascelles Ltd;[5] Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd;[6] Sunbird Plaza Pty Ltd v Maloney;[7] Foran v Wight;[8] Mantonella Pty Ltd v Thompson.[9]

[13] The plaintiff could hardly be thought to have been pursuing a money judgment for the entire price although only from the second defendant.  That judgment would have produced an anomalous situation in which the second defendant would be liable under a money judgment for the contract price even absent the performance of the contract.  Because the second defendant’s liability was no more extensive than that of the first defendant, and because the first defendant had not become liable to pay the price as a debt presently due and owing, such an order, had it been pursued against the second defendant, could not have been made:  see in particular Sunbird Plaza Pty Ltd v Maloney.[10]

[14] It was the amount in paragraph 41(a) (i.e. the entire purchase price with interest) which was apparently the subject of paragraph 9 of the Claim, in which a declaration was sought that the second defendant was obliged to pay “all sums due and payable by the First Defendant”.  Because there was no sum then due and payable by the first defendant, such a declaration would not have been apt.  Alternatively, if the plaintiff’s intention was to seek a declaration that the second defendant would be liable to pay any amount which became due and payable by the first defendant under the contract, such a declaration would have been unnecessary because there was no issue in that respect.  Put another way, the guarantor had not disputed that she had signed the guarantee and that she was bound by it if the first defendant was bound by its contract. 

[15] Paragraph 41(b) alleged that the second defendant was liable to pay to the plaintiff damages, as particularised in paragraph 34 of the pleading.  That paragraph became limited to an allegation of loss by the plaintiff’s incurring holding expenses for rates and land tax after 30 January 2009.  I ordered the payment of those amounts against the first defendant, as damages in addition to specific performance.[11]

[16] Paragraph 41(c) alleged that in the alternative to (a) and (b), the second defendant was liable to pay to the plaintiff the damages particularised in paragraph 35 of the pleading.  Paragraph 35 was pleaded on the express premise that the plaintiff was not entitled to specific performance of the contracts of sale.  It was a claim for damages for the loss of each bargain.  In particular, it claimed the difference between the price and the market value of the land. 

[17] Paragraph 41(d) remained an unquantified claim for the plaintiff’s “legal and other fees and disbursements”.  By the end of the case, the argument for this component ventured an estimate of $300,000 without any evidentiary basis.  That argument was made as part of the so-called “second claim”, i.e. that made against the second defendant, upon the premise that the contracts of sale had been validly terminated. 

[18] Returning to paragraph 11 of the Claim, the order sought was simply “[a]n order for the payment of such sums”.  But those sums, insofar as any component was quantified, were pleaded as alternative obligations of the second defendant.  Paragraph 41(c) was an alternative to paragraphs 41(a) and 41(b).  Paragraph 11 (and paragraph 16) of the Claim did not identify the money judgment which was sought against the second defendant and, in particular, in the event that the plaintiff succeeded in obtaining an order for specific performance.  Accordingly, the order referred to in paragraph 155 of the plaintiff’s submissions would have required considerable explanation, had the plaintiff’s counsel said anything about it.

[19] It was not addressed by counsel for the defendants, no doubt because they understood from the way in which the plaintiff’s case was presented, that the claims against the second defendant were in all respects in the alternative to the claims for specific performance.  It would be unfair now to the second defendant to allow the plaintiff to depart from the way in which its case was so clearly conducted, save for that vague assertion within the plaintiff’s written submissions which should have been identified orally if it was to be pursued.

[20] In the circumstances, I would not set aside or vary the order I made on 21 March, dismissing the claim against the second defendant, if I still had the power to do so. 

[21] I return to the question of costs.  This is a case where the joinder of the second defendant was the result of the stance taken by the first defendant.  It wrongly contended that it had avoided the contracts.  Now had its contention been correct, it does not follow from my judgment that the second defendant would have been liable.  As I wrote, the second defendant raised other defences which, because the contracts of sale were upheld, were unnecessary to determine.  But on the other hand, it cannot be said that the case against the second defendant was bound to fail for any of those reasons, had the contracts been duly avoided.  Accordingly, this is a case where the joinder of a successful defendant was not only reasonable, but where the conduct of the unsuccessful defendant (by wrongly contending that it had avoided the contracts) “has been such as to make it fair to impose some liability on it for the costs of the successful defendant”, as Blackburn CJ said in Steppke v National Capital Development Commission[12] in a passage cited with approval by Gibbs CJ in Gould v Vaggelas.[13]

[22] But in the circumstance where the defendants had the same legal representation, and one is the sole director of the other, it would be unrealistic to make a Bullock or Sanderson order.  It is more appropriate then to order that the first defendant pay the plaintiff’s costs of the proceedings as against it, but that there be no order for costs on the plaintiff’s claim against the second defendant

[23] The submission for the second defendant, that costs should follow the event, cannot be accepted in those circumstances.  The result of that order would be to distort the outcome for costs, where for the most part the one set of costs was incurred on the defendants’ side. 

[24] There remains the question of further orders.  In the judgment pronounced on 21 March, there was a decree of specific performance of each contract and an award of damages.  There is no particular complication as to what is required by way of performance of the contracts which would require a more detailed order for specific performance.

[25] In their written submissions delivered since the judgment, counsel for the defendants have suggested that “no orders be made against the first defendant as it has decided to appeal the judgment”.  But as I have said, orders have been made against the first defendant.  The question is whether the order for specific performance should be stayed pending an appeal.  That should be the subject of oral argument and, if necessary, further evidence. 

Footnotes

[1] Transcript Day 2 – 2.

[2] Filed by leave on 25 November 2010.

[3] Treton Pty Ltd v HM Australia Holdings Pty Ltd and Anor [2011] QSC 38 at [42].

[4] (1841) 7 M&W 474; 171 ER 852.

[5] (1933) 48 CLR 457 at 475-478.

[6] (1954) 90 CLR 235 at 252.

[7] (1988) 166 CLR 245 at 253.

[8] (1989) 168 CLR 385 at 396, 418, 445.

[9] [2009] QCA 80 at [63]-[64].

[10] (1988) 166 CLR 245.

[11] Treton Pty Ltd v HM Australia Holdings Pty Ltd and Anor (No 2) [2011] QSC 38 at [38].

[12] (1978) 39 LGRA 94 at 100; 21 ACTR 23 at 30-31.

[13] (1984) 157 CLR 215 at 230.

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Editorial Notes

  • Published Case Name:

    Treton Pty Ltd v HM Australia Holdings Pty Ltd and Anor (No 2)

  • Shortened Case Name:

    Treton Pty Ltd v HM Australia Holdings Pty Ltd (No 2)

  • MNC:

    [2011] QSC 78

  • Court:

    QSC

  • Judge(s):

    McMurdo J

  • Date:

    11 Apr 2011

Litigation History

No Litigation History

Appeal Status

No Status