SUPREME COURT OF QUEENSLAND

[1] THE COURT: Pursuant to a direction given by Williams JA when judgment was delivered in this appeal, the successful respondents have applied for costs on the indemnity basis against the appellants.  The basis of the application is that, in the District Court, judgment had been given for $242,189, with costs on the indemnity basis because the judgment sum exceeded an offer to settle made pursuant to the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) r 360.  These indemnity costs are estimated at $144,849 by the respondent’s solicitor. 

[2]  The appellants appealed against the judgment of the District Court judge.  On          1 November 2006, before the matter was heard, the appellant’s solicitor made an offer to settle the matter on the basis that the second appellant would pay the respondents $125,000, subject to certain conditions.  On 3 November 2006, the respondent’s solicitor made alternative counter-offers.  The first involved payment of $300,000 within 14 days, subject to similar conditions to those in the appellants’ offer, but additionally, with a formal deed of settlement and default provisions.  The second alternative offered to settle on payment of $150,000 within 14 days and payment of $150,000 plus interest at nine per cent over five years, on the same conditions as the first alternative, with a requirement for security over real property and a business of or associated with the second appellant, and a personal guarantee from him. 

[3]  On 6 November 2006, those offers were rejected.  Correspondence from the appellants’ solicitors claimed that there was an inability to pay those sums and other consequences affecting the respondents’ ability to recover damages if they pursued recovery by usual means.

[4]  Under the previous Rules of the Supreme Court, it had been decided in Tamwoy v Solomon [1996] 2 Qd R 93 that O.26 r 9 did not apply to the costs of an appeal.  In Tector v FAI General Insurance Co Ltd [2001] 2 Qd R 463, it was held that  Chapter 9 Part 5 of the UCPR which, it was said, was not appreciably different from O.26, did not apply to appeals.  It was further said that, in appeals, the ordinary practice of awarding costs on the standard basis should only be departed from where the conduct of the party from which indemnity costs was sought was “plainly unreasonable”. 

[5] In Deepcliffe P/L & Anor v The Council of the City of Gold Coast & Anor [2001] QCA 396, where there had been no offer to settle between trial and appeal, after referring to the passage from Tector which applied Tamwoy to the UCPR, the Court said:

“[5]The usual order is that costs are assessed on the standard or party-and-party basis and this should only be departed from where there is some unusual or differentiating feature about the case.  It cannot be said that the appellant’s conduct in pursuing this appeal was plainly unreasonable and there is no other feature of this case which distinguishes it from the norm.” (footnotes omitted)

[6]  In Grice v State of Qld [2005] QCA 298, where there was an offer to settle the appeal by the respondent for less than the judgment sum awarded in the District Court, the test for ordering costs on the indemnity basis under UCPR r 704 was said to be that they would ordinarily only be awarded if there was some evidence of unusual circumstances or unreasonable conduct.  The unreasonable conduct that justified such an award in that case was pursuing the appeal where the judgment concerned a modest amount which would have required leave to appeal and that the matter raised was not a matter of high principle and was of very limited application. 

[7]  In Kendall v Kendall & Ors [2005] QCA 390 the focus of the unsuccessful appeal was an issue not litigated below and not available to be raised for the first time on appeal.  The descriptions of applicable principles in Tector and Deepcliffe were quoted and applied in awarding costs on the indemnity basis on the ground that the appellant’s conduct was so unreasonable as to justify that order.

[8]  Ballesteros v Chidlow & Anor [2006] QCA 368 did not concern an offer to settle made between trial and appeal, but the consequences of an increase of damages on appeal which entitled the plaintiff to the benefit of UCPR r 360.  Reliance had been placed on Ibbs v Woodrow & Anor [2002] QCA 298, where, on appeal, the sum awarded changed the costs entitlement from a case where the defendant was entitled to the benefit of UCPR r 361 to one where the plaintiff was entitled to the benefit of UCPR r 360.  Indemnity costs for both trial and appeal were awarded in Ibbs, but as the Court observed in Ballesteros, without reference to whether the discretion should be exercised differently after appeal from after trial, or to Tamwoy or Tector.  In Ballesteros, only standard costs were allowed in respect of the appeal. 

[9]  Valleyfield P/L v Primac Ltd & Anor [2003] QCA 398 is an example of competing factors being taken into account in deciding whether indemnity costs ought to be ordered on appeal in a case where an offer had been made between trial and appeal. 

[10]  These authorities show the kind of approach taken with regard to indemnity costs and that it is not inevitable that the making of an offer to settle after trial but before appeal which betters the outcome obtained by the opposing party on appeal will result in an order for indemnity costs.  In the present case, although the appellant was wholly unsuccessful, the appeal was not unreasonably instituted.  There were issues that depended on interpreting the meaning of passages in the judgment appealed from.  It is problematical whether professed inability to accept an offer and abandon the appeal should have any impact on the issue of costs.  It may depend on the context in which it is raised. 

[11]  Reading the correspondence annexed to the respondents’ solicitor’s affidavit as a whole, it is clear that there was no inclination on the part of the appellants to abandon the appeal except on their terms.  The professed financial difficulty is referred to not as a reason for being unable to accept the respondents’ offers but as advocacy for acceptance by the respondents of a sum that was, realistically, about one third of the total of the judgment sum and indemnity costs in settlement of the whole matter.  The bona fides of the assertions of fact in the appellants’ letter was challenged by the respondents; what the appellants claimed to be the commercial realities in favour of their offer was reasserted in their reply. 

[12]  There is no substantial evidence upon which a conclusion can be reached as to the second appellant’s financial position.  While the appeal was comprehensively lost, it cannot be stigmatised as one which was unreasonably instituted.  As findings of fact were involved, it was a difficult appeal for the appellants to succeed in, unless the findings were affected by inconsistencies in the reasons for judgment that were contended for.  Those were ultimately not established but issues that genuinely needed to be resolved in the appeal were raised by the terms of the judgment.

[13]  In the circumstances the case falls short of one where the respondents have established unreasonableness or other unusual or differentiating features from the norm.  The order therefore is that the appellants pay the respondents’ costs of and incidental to the appeal on the standard basis. 

Amendment to name of first appellant

[14]  The respondents have applied for amendment of the proceedings to reflect the change of name of the first appellant to Keenfilly Pty Ltd.  According to an ASIC Historical Extract, that occurred on 14 February 2003.  No application was made to amend the name until now, although a consent order for security for costs and a stay pending appeal made by Holmes JA makes passing reference to the second appellant being “now known as Keenfilly Pty Ltd”, and the change of name was pleaded in the amended statement of claim filed 10 November 2005.

[15]  UCPR r 375(3) requires the court to allow or direct the amendments necessary to correct a misnomer of a party.  It is appropriate that the amendment be made to avoid complications with enforcement.  It is directed that the judgment of the court be amended by deleting “Rare Import Export Co Pty Ltd” and inserting in lieu thereof, wherever it appears, “Keenfilly Pty Ltd”.

ORDERS

1. The appellants pay the respondents’ costs of and incidental to the appeal on the standard basis.

2. The coversheet of and the reasons for the judgment of the Court delivered 23 March 2007 are amended by deleting Rare Import Export Co Pty Ltd and inserting in lieu thereof, wherever it appears, Keenfilly Pty Ltd.