Dale v Nichols Constructions Pty Ltd
[2004] QDC 26
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- Unreported Judgment
- Dale v Nichols Constructions Pty Ltd[2004] QDC 26
- Add to List
Dale v Nichols Constructions Pty Ltd[2004] QDC 26
Dale v Nichols Constructions Pty Ltd[2004] QDC 26
DISTRICT COURT OF QUEENSLAND
CITATION: | Dale v Nichols Constructions Pty Ltd [2004] QDC 026 |
PARTIES: | WENDY DALE First Applicant ROBERT NORMAN DALE Second Applicant v NICHOLS CONSTRUCTIONS PTY LTD (ACN 010 763 505) Respondent and BROADBENT RADICH SAMPSON LAWYERS Third Party |
FILE NO/S: | D868 of 2000 |
DIVISION: |
|
PROCEEDING: | Originating application |
ORIGINATING COURT: | District Court, Southport |
DELIVERED ON: | 4 March 2004 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 24 February 2004 |
JUDGE: | McGill DCJ |
ORDER: | As to costs, order that:
Direct that the costs to be allowed for counsel be more than the costs under Part 2 of Schedule 2. Certify that the registrar may allow a higher amount under item 27 that the registrar considers proper in the circumstances. |
CATCHWORDS: | PRACTICE – Costs – offer to settle – whether effective – whether other order appropriate – applicant with limited success – whether assessment above scale justified. PRACTICE – Offers to settle – offer to two other parties conditional on both accepting – rules apply – whether other order appropriate. Uniform Civil Procedure Rules rr 360, 361. |
COUNSEL: | M E Eliadis for the first applicant E J Morzone for the respondent D G Clothier for the third party |
SOLICITORS: | Clayton Utz for the first applicant Hickey Lawyers for the respondent Bartley & Associates for the third party |
- [1]This is an application for relief under the Consumer Credit Code. The application was filed in the District Court at Southport on 13 October 2000. It came on for hearing before me at Southport on 10 September 2002, and after four days the hearing was adjourned to 3 October 2002 in Brisbane. On that day and the following day I heard the rest of the evidence, and some oral argument, which was supplemented by written submissions. I circulated reasons which I prepared on 12 December 2003;[1] one of the matters which had to be decided was the amount payable, in respect of each of two loan contracts, to discharge the loan on a particular date, either the date of judgment or a later date, and it was necessary for me to have information about the payments which had been made since judgment was reserved in order to calculate that figure. That impacted on the amount payable by the third party to the respondent, so judgment on the third party proceedings could also not be finalised without further submissions.
- [2]The matter was listed for further hearing before me on 24 February 2004. On that occasion the parties were in agreement as to the adjustments to the figures I had provided in my judgment to bring them up to date, and, after hearing some submissions in relation to how allowance should be made in respect of future loss, I made declarations as to the amounts required to pay out the loan contracts[2], and fixed the damages payable by the third party to the respondent.[3] I also made the other orders foreshadowed in the reasons which I had published earlier.
Costs
- [3]That left the question of costs. I heard submissions and received some additional evidence, in the form of a copy of an offer made by the respondent to the applicant and the third party between the hearing in Southport and the resumed hearing in Brisbane. I was not referred to any other offers, and neither the applicant nor the third party had indicated a willingness to accept the respondent’s offer. The offer involved the respondent’s receiving from the applicant less than I ultimately held was payable by the applicant in order to discharge the loan contracts, and involved the third party making certain payments of costs to the respondent but no other payments. It seems to me that the respondent’s offer so far as it concerned the third party was more favourable to the third party than the ultimate outcome, and counsel for the third party did not argue to the contrary. The respondent therefore submitted that so far as the costs as between the applicant and respondent were concerned, r 361 applied, so that the respondent should pay the applicant’s costs of the proceeding up to 3 October 2002, but the applicant pay the respondent’s costs of the proceeding to be assessed on an indemnity basis on and from 3 October 2002: r 361(3). So far as the position between the respondent and the third party was concerned, the respondent submitted that r 360 applied, and accordingly the respondent was entitled to costs on an indemnity basis from the third party.
- [4]Counsel for the applicant submitted that she should have her costs of the proceeding against the respondent, having been successful on most of the matters in issue; there was little time or evidence which related only to matters on which the applicant failed. Rule 361 did not apply because the offer was conditional on its being accepted by both other parties, and the third party had not indicated its willingness to accept it. He conceded that the applicant had not indicated her willingness to accept it. He also sought special orders in relation to the scale on which the costs should be assessed, which I will deal with separately.
- [5]Counsel for the third party conceded that, in the light of the reasons which had been published, the third party was liable to pay the respondent’s costs of the third party proceedings. However, the third party disputed the applicability of r 360, essentially on the same basis as counsel for the applicant: as the applicant had not accepted the offer, the respondent was not in a position to settle if the third party had been willing to accept the offer, and therefore it should not be treated as an offer for the purposes of the rule. Apart from this, the third party submitted that the applicant had not been substantially successful in the proceedings, and that there were a number of issues in respect of which the applicant had failed. The applicant accordingly should not get the full costs of the proceedings, and, bearing in mind the amount of time occupied in the course of the trial in the various issues, and the extent to which the applicant had been successful or otherwise, a fair outcome would be that there be no order for costs as between the applicant and the respondent. If an order for costs were made in favour of the applicant, the third party should not have to indemnify the respondent in respect of the whole of those costs, because some of the matters litigated arose out of conduct of the respondent for which the third party was not responsible. The liability of the third party to the respondent was based simply on inadequate documentation, and, so far as the respondent was liable to pay costs in respect of matters other than inadequate documentation, the third party should not be indemnifying the respondent for those costs.
Effect of the offer
- [6]Some attention was directed to the requirement, in each of r 360 and r 361, that at the relevant time the party making the offer be “willing and able to carry out what was proposed in the offer”. Each submitted that, because the offer was conditional on the concurrence of the other party and the concurrence did not occur, this requirement had not been satisfied so the rule did not apply. No authority for that proposition was cited, and I have not been able to find any decision which throws any light on the issue. It does not seem to me however that in principle there is any reason why that restriction on the rule should apply. If there are more than two parties to a particular proceeding, it may well be that one of the parties needs to be able to settle with two or more other parties in order to remove any further involvement in the proceeding. In cases not covered by r 363, a party making an offer in such circumstances needs to be able to make an offer capable of acceptance by all other parties, and conditional on acceptance by all other parties, for the acceptance of the offer to be of any practical use.
- [7]It does not seem to me that this puts the other parties in a difficult position. If they do not accept an offer which it turns out ought to have been accepted, the consequences provided under the Rules can follow, unless another order for costs is appropriate in the circumstances. If one particular party is willing to accept the offer but the offer does not proceed because one or more others are not willing to accept it, that would be a good reason why as against that party another order for costs would be appropriate. In the present case however that complication does not arise, because neither of the other parties was willing to accept the offer.
- [8]In these circumstances in my opinion prima facie the rule does apply, so that, as between the applicant and the respondent, the appropriate order to make is that indicated in r 361(3), and as between the respondent and the third party, the appropriate order is that in r 360(1). As between the applicant and the respondent, one situation were it might well be appropriate for another order to apply would be if the order indicated by r 361(2)(a) was more generous than would be appropriate anyway by an application of ordinary principles as to costs. That raises the question of whether the applicant’s costs should be limited because of the various issues on which the applicant was unsuccessful.
Should applicant’s costs be further limited?
- [9]There were a number of issues raised at the trial, and in respect of some of them the applicant was unsuccessful. The major issue was whether the Consumer Credit Code applied to either or both of the loan transactions. That depended on why the credit was provided, and whether it was provided in the course of a business of providing credit or as part of or incidentally to any other business of the respondent. As to the former there was some legal issue as to what was the correct test, which was resolved in favour of the applicant, and an issue about whether there was a declaration under s 11(2). There was no dispute there had been a form signed; there was a factual issue as to whether it related to the first loan or the second loan, resolved in favour of the respondent, but the document signed was held not to be effective in relation to the second loan because it did not relate to it, being signed too early and at a time when what was being discussed was a different proposed loan. To some extent that was an issue of law, but there were also factual questions about what had passed between the parties in relation to the proposed second loan before and after the time when the document was signed, which involved some examination of the facts.
- [10]With regard to the other aspect of the test, this required some consideration of evidence, and some evidence from the respondent, but essentially it was an exercise in characterising what flowed from the evidence of the respondent and the available documents, and interpretation of the statute. In these matters, the applicant was successful. With regard to the allegations of breaches of the Code in respect of the first loan, the applicant was successful in relation to three of the four matters alleged. One of these was essentially uncontroverted (that unauthorised payments had been demanded and received) although there was some dispute as to the number and amount of such payments, which required a good deal of evidence and occupied a certain amount of time; the rest essentially involved the consideration of documents and the application of the Code to them. It was however, in relation to this, and to some extent all of the matters, necessary to have a clear understanding of the history of the transactions, and that required a certain amount of evidence both oral and documentary.
- [11]In relation to breaches of the Code in respect of the second loan, there was no great dispute that if the second loan was covered by the Code there had been breaches in respect of it; this was largely just a matter of relating what had occurred to the requirements of the Code.
- [12]The question arose whether there had been a breach of s 80(2) of the Code in respect of earlier proceedings in this court, and whether any issue of estoppel arose from those proceedings. Some evidence about those proceedings was necessary, but essentially this involved the resolution of questions of law.
- [13]The next issue was whether the second loan contract was unjust. That involved a consideration of the factual circumstances surrounding it, and, had I concluded that it was unjust, it would have been relevant to take into account the conduct of the parties since the contract was entered into: s 70(5). It was necessary for me to consider a good deal of evidence surrounding the making of this further loan, which involved the resolution of a significant dispute as to what was said in one conversation. That dispute was resolved in favour of the respondent. Otherwise it was largely a matter of analysing the various relevant facts, and considering submissions as to the true scope of the Code. The same applied to the allegation that there had been a breach of the Trade Practices Act. In respect of both of these claims the applicant was unsuccessful.
- [14]Compensation was claimed for breaches of the Code, in respect of which the applicant was unsuccessful. No great part of the trial was taken up with evidence about this matter however; the applicant was unsuccessful essentially because of an absence of evidence of loss suffered as a result of the breaches.
- [15]An application was made for a civil penalty because of breaches of key requirements. It was necessary to consider a wide range of matters in order to decide whether a civil penalty would be imposed, including the conduct of the parties before and after the credit contract was entered into. Some civil penalty was imposed in relation to both contracts, although I think it fair to say that the applicant was seeking a much more extensive civil penalty than that ultimately awarded. In written submissions the applicant sought a civil penalty in the amount of all interest charges payable under the first credit contract and second credit contract. By comparison with that, what was achieved (two payments totalling $6,000) was very modest, although it must be said that a significant amount of the interest claimed to be payable in respect of the first loan contract was held not to be payable because of a breach of s 28 of the Code by the formula for calculating default interest, which meant that for almost all of the time which was relevant the applicant was liable to pay only 11 percent interest on the amount outstanding, rather than 16 percent. From my point of view the issue of civil penalty was made more difficult by the absence of very much in the way of earlier authority about how those provisions of the Code are to be applied. That however did not contribute to the length of the trial.
- [16]It was then necessary to determine the balance payable under each of the credit contracts, which involved resolving some disputes as to whether or not particular payments were made, or how the payments should be characterised. To some extent this turned on issues of credibility, and that made it necessary to make findings on various matters. In general in relation to this I had serious doubts about the reliability of the applicant’s evidence, and I was not particularly impressed with the reliability of her husband’s evidence, which generally I did not accept unless it was supported by other evidence or was inherently plausible. I was more favourably impressed by Mr Nichols, although I still do not accept everything he said. I also treated the evidence of the other witnesses with a good deal of caution.
- [17]With regard to the dispute about the payments, although this was not very extensive by the time the matter reached trial, I think there is some force in the point made by counsel for the applicant that this was an issue where the respondent’s position changed somewhat, so that it was necessary for the applicant to come to court in order to get the respondent to acknowledge many of the payments made. Of the disputed payments on which I had to adjudicate, the applicant was successful in three and unsuccessful in three.
- [18]My impression during the trial was that taking the evidence seemed to require a long time to cover the ground. It is however difficult to apportion blame for this between the parties. The applicant was in the witness box for about four hours, of which almost three hours was cross-examination. Her husband was in the box for seven and a half hours, of which four and a half hours was cross-examination, while Mr Nichols was in the box for five and a half hours, of which four hours was cross-examination. The third party’s witnesses did not take as long each, but there were more of them, so that their evidence occupied a day and a half.
- [19]Although there were significant parts of the applicant’s case where the applicant was either unsuccessful or succeeded only to a modest extent, it is difficult to apportion any particular part of the trial, or part of the evidence, to those parts of the case where the applicant was unsuccessful. Evidence about what happened between the parties and the disputes about payment and so on was relevant to the determination of what payments had been made in order to determine the balance owing on each of the loan contracts, but was also relevant to the conduct of the parties after the contract, which was relevant to whether relief should be granted under s 70, and was also relevant to whether a civil penalty should be imposed under s 102: see subsection (4)(a). At the end of the day there were not a lot of factual disputes to be resolved. Where there were significant factual disputes remaining however, they were largely resolved in favour of the respondent. I have in mind matters such as whether Mr Dale told Mr Nichols at his house that the purpose of the second loan was to pay out the vendor, or the circumstances surrounding the seizure of the office equipment and its return.
- [20]That is the difficulty with limiting the applicant’s costs by reference to issues. I think it is fair to say that there was little in the way of evidence or time occupied solely with those particular aspects of the claim where the applicant was wholly unsuccessful. On the other hand, there were a number of factual issues where the applicant was unsuccessful, which were of some relevance to one or more of the issues where the applicant ultimately had some success.
- [21]I am conscious that there are limits to the flexibility that I can apply in a matter such as this. A successful plaintiff’s costs are generally not limited just because there are some factual issue on which the plaintiff failed.[4] Costs can be dealt with separately by reference to “issues” where there are a number of issues in an action and a party has succeeded on some but failed on others, and “issues” are not confined to separate causes of action but extend to identifiable parts of the litigation: Colburt v Beard [1992] 2 Qd R 67 at 70 per Thomas J. In that case however the costs order was made by reference to issues which did amount to different causes of action.
- [22]If it were not for the effect of the offer I would accept the submission that, in the light of the factual issues on which the applicant was unsuccessful, and bearing in mind the relatively limited success achieved overall in the proceeding, the applicant’s costs should be limited to some extent, even though it is difficult to identify particular parts of the litigation in respect of which the costs could be said to follow the event. That is because of the extent to which particular factual issues were relevant in a number of ways, including as part of the chronicle of events generally in relation to these loans. It is perhaps better put on the basis that the trial was unnecessary lengthened because particular factual issues were raised by the applicant on which she was unsuccessful. However, that will be the result anyway if effect is given to r 360; the applicant will get the costs of four days of the proceedings but will have to pay the costs of two days.
- [23]If there had been no relevant offers by the respondent, I would have limited the costs payable to the applicant to a hearing of four days anyway, to reflect the extent to which the trial was lengthened because of the pursuit of issues on which the applicant was unsuccessful. But the question is whether I am satisfied that some order for costs other than that dictated by r 361(1) is appropriate in the circumstances. If the order in favour of the applicant would have been even more limited, I think that that would have justified departing from the order dictated by r 361. But I would not reduce the applicant’s costs other than by limiting the costs to a trial of four days, and in those circumstances I do not think it appropriate to depart from the order required by r 361 as between the applicant and the respondent.
Costs against the third party
- [24]With regard to the position as between the respondent and the third party, in respect of the costs payable to the applicant, the respondent’s primary claim, that if properly advised it would not have entered into the transaction at all, was not made out. Rather the respondent became entitled to damages to the extent that it was worse off because of the third party’s failure properly to document the two transactions.
- [25]Had the transactions been properly documented, there would presumably have been no dispute as to the applicability of the Consumer Credit Code, nor would the applicant have been able to establish any breaches of the Code in relation to either transaction up to the point where the contracts were entered into. But there could well have been in any case a substantial dispute, as ultimately emerged, between the parties as to the amounts payable under the contract, because of the dispute as to what amounts had been paid and when. That dispute was a significant part of the applicant’s claim, and occupied a substantial part of the time of the trial, and is really independent of any deficiency in the documentation of the transaction. Accordingly I do not think in the present circumstances that it is appropriate to order that the respondent recover from the third party the whole amount payable to the applicant by way of costs. I think that there is force in the submission on behalf of counsel for the third party, that the indemnity should be limited to half of the amount required to be paid by the respondent to the applicant. That amount is of course to be ascertained after setting off the costs payable to the applicant by the respondent, and the costs payable by the applicant to the respondent.
- [26]So far as the respondent’s costs of the third party proceedings were concerned, it was not disputed that the third party should pay those. Rule 360 if applicable would make those costs payable on an indemnity basis. Bearing in mind however that the offer was made at a very late stage, and that the respondent’s success against the third party was limited, in my opinion it would not be just for the respondent to recover those costs assessed on an indemnity basis in respect of the whole of the proceeding. Accordingly I think it appropriate to depart from the order required by r 360, so as to omit the requirement that the costs be assessed on the indemnity basis.
Costs of changing the hearing date
- [27]There is a further issue in relation to costs, which arose in this way. My reasons were circulated on 12 December 2003, with a request for further submissions. It was necessary for the parties to agree on what further payments had been made, and bring the schedules that I annexed to the reasons for judgment up to date. I expected that they would be able to agree upon those figures, and ultimately they were. It was however unsurprising that that did not occur until after the Christmas holidays.
- [28]On 8 January 2004 my associate nominated 13 February as a date on which the matter could be dealt with. That was in response to an approach by the solicitor for one of the parties; it was not at my initiative, because I was away from Brisbane at the time, although he did consult me before advising that particular date. It does not appear that the suitability of this date was checked with either the solicitor for the applicant or the solicitor for the third party, but it was some time in advance and it was assumed that if for any reason it was not suitable, arrangements could be made to vary it.
- [29]Initially the applicant appeared willing to proceed on 13 February; that date was referred to as the date on which the matter would be dealt with in a letter of 13 January 2004 to the solicitor for the respondent. However on 10 February the solicitor for the applicant advised that counsel for the applicant in the trial would not be available on 13 February, and sought an adjournment to a later date. This was relatively late advice of an inability to proceed on 13 February, and the respondent’s solicitor sought an order that the costs thrown away as a result of the postponement of the date be paid by the applicant. As it happened, counsel for the third party was also not available on that day, although no costs order was sought by the third party.
- [30]Bearing in mind the nature of the matters that had to be resolved, it was obviously appropriate for the same counsel to appear if at all possible. The issue is really whether, because of the late advice of the inability to proceed on 13 February, extra costs were incurred by the respondent. If so, then I think they ought to be paid by the applicant. I have some difficulty however in seeing why any significant amount of additional costs should be payable in such circumstances, given that the matter was simply being postponed to another date when counsel who would otherwise have appeared on 13 February was able to appear. There may be some small amount to cover attendances associated with the change in the date. There is no reason why any counsel’s fees should be allowed; no work by counsel should have been wasted, or time unavoidably lost as a result of this change. The solicitor for the respondent in correspondence suggested that the costs associated with changing the date were $2,200. That strikes me as far too high. It must include some allowance for counsel’s fees, which in my opinion should not be allowed.
- [31]To the extent that any costs have been properly incurred by the respondent in connection with the change of date, they would be recoverable from the applicant under the costs order made pursuant to r 361. In these circumstances it is not necessary to make any special order for these costs. Otherwise, I would have ordered that the applicant pay the respondent’s costs properly incurred in changing the date for finalising the judgment.
Scale of costs
- [32]Another matter which arose was the question of the scale of costs. The applicant sought special orders under paragraph 4 of the District Court Scale of Costs,[5] that costs be allowed at more than the costs under Part 2, on the ground that the costs were not sufficient because of the work involved, or the importance, difficulty or complexity of the proceeding. In the alternative, counsel sought a certification under item 27(3) within Part 2 allowing a higher amount that the registrar considered proper for preparation for the hearing, because of special circumstances. In relation to the former, the applicant sought a direction that costs be assessed on the Supreme Court Scale, or in the alternative, more than the District Court Scale in such amount as the registrar thought proper. The respondent and the third party did not oppose certification under item 27(3). However they opposed the making of a special direction under paragraph 4(c).
- [33]I am not aware of any authority which gives any guidance as to the circumstances under which it might be appropriate to direct that costs be allowed on the Supreme Court Scale. I would think that, if that were appropriate, it would certainly be in a most unusual case. If the matter had proceeded in the Supreme Court and the relief obtained could have been obtained in the District Court, the costs would have been payable only on the District Court scale under r 698, in the absence of some order to the contrary. In my view, the fact that a matter is proceeding in the District Court ought always to involve a saving in cost. Whether a situation could ever arise when such an order would be appropriate, I do not think it is appropriate in this case.
- [34]The matter was certainly of unusual length and complexity, in terms of the general run of District Court civil litigation. It is unusual for a District Court civil trial to take as long as six days, and there was a good deal of factual complexity, although that largely involved sorting through the evidence and working out just what it indicated had occurred. The financial transactions between the parties over a relatively long time had to be considered, in circumstances where their record keeping had not been all that good. The matter was not made any easier by the unhelpful state of the documentation provided during the trial. However, that is probably a matter which increased my work rather than the legal work undertaken by the parties. As will be apparent from my judgment, there were a number of legal issues involved, some of which, involving the interpretation and operation of the Consumer Credit Code, had to be resolved with little guidance from authorities.
- [35]In terms of the actual outcome of the matter however it was of importance only to these parties. This is not like a test case where particular effort and particular resources might be brought to bear in relation to a dispute which had much wider implications than the amount immediately in issue between the parties.
- [36]There is also the consideration that, putting aside item 27, generally if additional work is required for a particular matter that will result in additional costs being payable by the application of the ordinary provisions of Part 2 of Schedule 2. One area where that appears not to be the case is counsel’s fees, although it is not clear that the scale fees apply directly in the present case, because this is an “other proceeding within the jurisdiction of the court”, so that on the basis of the note after item 87 fees should be such amount as the registrar considers proper in all the circumstances. I would certainly regard the fees in items 73 to 87 as being quite inadequate for this matter, and out of an abundance of caution I will direct that the costs allowed for counsel be more than the costs under Part 2, because of the difficulty and complexity of the proceeding.
- [37]For the same reason, a higher amount should be allowed under item 27. Applying the approach indicated in McCoombes v Curragh Queensland Mining Ltd [2001] QDC 142[6], this is clearly a case to certify that the registrar may allow a higher amount under item 27 that the registrar considers proper in the circumstances. Apart from this however I do not think any general order allowing higher fees in this case is warranted. No doubt in many respects this scale is inappropriate for litigation of this nature. It has really not been properly reviewed even to allow for the increase in range of jurisdiction available in this court as a result of the 1989 amendments to the Act.[7] However, I do not think that that is a factor which should be taken into account by ordering higher costs whenever a particular action is more than usually long, difficult or complicated. It may well be appropriate to certify under item 27 fairly readily if a matter is unusually long, difficult or complicated, but I think something more is required before a direction is given under paragraph 4(c) of Part 1 of Schedule 2. In all the circumstances I do not think that this is a matter which justifies any other special direction.
- [38]The orders for costs therefore will be:
- (a)I order the respondent to pay the applicant’s costs of and incidental to the proceeding to the opening of the court on 3 October 2002, to be assessed.
- (b)I order the applicant to pay the respondent’s costs incurred after the opening of the court on 3 October 2002, to be assessed on the indemnity basis.
- (c)I order the third party to pay the respondent’s costs of and incidental to the third party proceeding to be assessed.
- (d)I order the third party to indemnify the respondent in respect of one-half of the net amount payable by the respondent to the applicant under the costs order, after setting off the amount payable by the applicant to the respondent.
I direct that the costs to be allowed for counsel be more than the costs under Part 2 of Schedule 2.
I certify that the registrar may allow a higher amount under item 27 that the registrar considers proper in the circumstances.
Footnotes
[1] [2003] QDC 453.
[2] As at 24 February 2004 $119,593.50 for the January 1998 loan, and $55,590.96 for the March 1998 loan.
[3] At $58,000.
[4] Cairns “Australian Civil Procedure” (5th Ed 2002) p. 519.
[5] Part 1 of Schedule 2 to the UCPR.
[6] Which was not said to be wrong by the Court of Appeal: [2001] QCA 379.
[7] Act 40 of 1989, s 6.