SUPREME COURT OF QUEENSLAND

[1]  McMURDO P: I agree with Fraser JA’s reasons for refusing the respondent’s application to vary the orders made by this Court on 19 June 2009.

[2]  MUIR JA: I agree with the reasons of Fraser JA.

[3]  FRASER JA: On 19 June 2009 the Court allowed an appeal by the plaintiff, the liquidator of Scholz Motor Group Pty Ltd, against a decision of a District Court judge dismissing her claim to recover money from the defendant, Mr Peters, for the benefit of the company's creditors.  The Court found that the trial judge should have accepted the liquidator’s claim that Mr Peters had received from the company an unfair preference under s 588FA(1)(b) of the Corporations Act 2001 (Cth).  The preference was in the form of a bank cheque for $10,000 and two cars worth $85,000.  The Court set aside the primary judge's orders and instead entered judgment in favour of the liquidator against Mr Peters in the sum of $95,000 together with interest under s 47 of the Supreme Court Act 1995 (Qld) at 10 per cent per annum from 26 January 2006 to 19 June 2009.  The Court ordered that Mr Peters' counterclaim be dismissed with costs.

[4] The Court also ordered Mr Peters to pay the liquidator's costs of and incidental to the trial and the appeal, but upon delivery of the judgment and at Mr Peters’ request the parties were given leave to file submissions as to the appropriate orders for costs of the trial and appeal.

[5] In the submission filed for Mr Peters, he contends that the costs orders pronounced by the Court should be replaced by orders that there be no orders as to costs or, alternatively, that the liquidator should not be awarded her costs of the trial.  The liquidator contends that the orders made on 19 June are appropriate.

[6] Mr Peters’ argument is based upon his contention that the trial and subsequent appeal were necessary only because the liquidator unreasonably failed to accept Mr Peters’ offer of settlement made in his solicitor's letter of 13 June 2008.  Mr Peters argues that the liquidator should have accepted Mr Peters’ contention that the total amount of the preference was only $95,000, constituted by the $10,000 amount of a bank cheque plus $85,000 as the value of the two cars.  That valuation reflected the price Mr Peters received when he sold the two cars.  The liquidator had claimed that the cars were worth a lot more.  Mr Peters’ position was vindicated by the trial judge’s decision that the amount of the claimed preference was $95,000, which included $85,000 as the total value of the two cars.  The liquidator did not pursue an appeal on that issue.

[7] In the letter of 13 June 2008 Mr Peters’ solicitor wrote that Mr Peters was "minded to voluntarily pay the alleged preference claimed by your client, without any admission of liability…" Mr Peters insisted that "any such payment" would need to be on reasonable terms.  The relevant terms expressed in the 13 June letter were:

"3…our client will instruct us to pay the amount of the alleged preference to your client (the amount to be agreed based on our comments below);

4. Each party will be [sic: "bear"] their own costs of and incidental to this proceeding;…"

[8] After setting out other terms which are not material here, Mr Peters’ solicitor referred to a dispute between the parties about the value of the motor vehicles,  noted that Mr Peters' position was that the market value was the value for which he sold the vehicles ($85,000), noted that the liquidator sought to recover $108,300 but had increased that figure, apparently because of an expert's report, and concluded that Mr Peters, "may be prepared to pay to your client the sum of $108,300 as a concession (in an effort to resolve this matter commercially) if your client is agreeable to this proposal."

[9] By a letter from the liquidator's solicitor of 25 June 2008 the liquidator rejected the "offer".  In an open letter of the same date the liquidator's solicitor observed that the liquidator’s contention that the motor vehicles were worth more than $85,000 was based upon the cost price of the two cars paid by the company, rather than expert opinion.

[10]  The general rule is that costs of a proceeding are in the discretion of the Court but follow the event unless the Court orders otherwise: Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”), r 681(1).

[11]  The event of the appeal was that the liquidator succeeded on all issues.  The liquidator did not challenge the trial judge’s valuation of the cars at $85,000.  Mr Peters’ argument provides no basis for depriving the liquidator of her costs of the appeal.

[12]  The event of the trial, after appellate correction, was that the liquidator succeeded in recovering $95,000 together with interest at 10 per cent per annum and costs.  I am not persuaded that the circumstances relied upon by Mr Peters, including that the liquidator recovered less than the full amount of her claim, constitute sufficient grounds for depriving the liquidator of her costs of the trial.

[13]  The tentative terms of the 13 June 2008 letter demonstrate that it did not amount to an offer to compromise the liquidator’s claim: it was simply an invitation to negotiate.  Furthermore, this Court’s decision suggests that in June 2008 the liquidator was entitled to more than the $108,300 which Mr Peters' solicitor indicated that he "may be prepared to pay".  The letter made no provision for the liquidator's costs of the proceeding or for interest.  On the basis of the Court's order for interest at 10 per cent, in June 2008 the liquidator was entitled to recover about $117,000 plus costs, rather than $108,300.  I am also not persuaded that the liquidator’s view that the cars were worth more than the amount received for them by Mr Peters was unreasonable.  The liquidator relied upon the price the company had originally paid for the cars.  The trial judge upheld Mr Peters’ contention, but that does not mean that the liquidator’s view was unreasonable.

[14]  It is not submitted for Mr Peters that the liquidator should be ordered to bear or pay the costs of the valuation issue on the footing that it should be treated as a separate question or part of the proceeding: UCPR, r 684(1).  I would not think that such an order is appropriate, given that the liquidator’s contention was not unreasonable and that the valuation dispute appears not to have occupied a great deal of time at the trial relative to the other issues.[1]  (Mr Peters contends that the relevant evidence occupied about one third of the first day of a three day trial.)

[15]  For these reasons I would refuse the respondent's application to vary the orders made by the Court on 19 June 2009.