Woo v Prior[2007] QDC 133

DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   This court delivered its decision in Woo & Wong v Prior & Thomas on 22 December 2006 and ordered that the sum of $10,000 (plus interest) paid into court from the Bryan B. Russell Trust Account be paid out to the defendants, or at their direction.  That order represented “success” in respect of the defendants’ application filed on 27 September 2006^[1], amounting in practical terms to a belated “counterclaim”.  The originating claim by the plaintiffs sought declaratory relief and the return of the deposit moneys to the plaintiff.  In Woo & Wong v Prior & Thomas [2006] QDC 313 Robin QC DCJ ordered that the proceeding, originally commenced as a claim, should proceed as an application, with the hearing to proceed on 28 September 2006.  The “belated counterclaim” (as I have described it) was therefore filed just a day before the hearing of this matter.

Offers to Settle

2. [2]
   The defendants made two formal offers pursuant to Pt 5 Ch 9 of the Uniform Civil Procedure Rules (“UCPR”) on 3 May 2005 and 25 January 2006 respectively.  There is no dispute that the defendants obtained a judgment more favourable than either of their offers to settle.

3. [3]
   The defendants claim that the issue of costs should be dealt pursuant to UCPR r. 360 (costs if offer to settle by plaintiff) and accordingly, the defendants having been successful, it is submitted that the plaintiffs should pay the defendants’ costs of and incidental to these proceedings on an indemnity basis.

4. [4]
   However, the difficulty with that submission is that on any view of the proceedings, the offers to settle were not made by a “plaintiff” but were made by a “defendant”, who did not obtain the status of a “plaintiff” by counterclaim until (at the earliest) 27 September 2006 (the day before hearing). In those circumstances, it is my view that UCPR r.360 does not apply to the offers to settle in this matter.

5. [5]
   It is then a question as to whether the matter falls to be decided pursuant to UCPR r. 361.  Relevantly, in the circumstances of this case, UCPR r. 361(2) provides that:

“Unless a party shows another order for costs is appropriate in the circumstances, the court must –

1. (a)
    order the defendant to pay the plaintiff’s costs, calculated on the standard basis, up to and including the day of service of the offer to settle; and

2. (b)
   order the plaintiff to pay the defendant’s costs, calculated on the standard basis, after the day of service of the offer to settle.”

I note further, that where there has been more than one offer which satisfies UCPR r. 361(1), then “the first of those offers is taken to be the only offer for this rule”^[2].

6. [6]
   The defendants submit that the plaintiffs totally failed in their claim for declaratory relief, should have appreciated that their case had no worthwhile prospects of success, and that it was therefore unreasonable not to accept the offers submitted by the defendants, which in the defendants’ submission leads to the proposition that this court should exercise its discretion to order indemnity costs in favour of the defendants pursuant to UCPR r. 361. However, it is clear that where plaintiffs have not obtained any judgment, UCPR r. 361 also does not apply^[3].

General Discretion as to Costs

7. [7]
   In the circumstances, it is a situation where the court is obliged to exercise its general discretion as to costs^[4].  In my view, it could not be said that the plaintiffs’ case was “hopeless from the start”^[5] or that the plaintiffs’ case “had no worthwhile prospect of success”.^[6] In these circumstances, I do not consider that the sanction of indemnity costs is appropriate. However, as the successful litigant, the defendants are entitled, in accordance with the usual practice, to the benefit of an order for costs on a standard basis.

Order

8. [8]
   I order that the plaintiffs pay the defendants’ costs of and incidental to the proceedings on a standard basis.