DISTRICT COURT OF QUEENSLAND

1. [1]
   I delivered judgment in this claim on 29 July 2011.^[1] I have now received and considered detailed written submissions as to costs.

2. [2]
   There were two issues in the case – whether the defendant had lodged a caveat without reasonable cause and, if so, whether the plaintiffs suffered loss as a result.

3. [3]
   The first issue required consideration of the onus of proof, the meaning of the term, “without reasonable cause” and the principal factual dispute between the parties. I concluded the defendant bore the onus of proving he did not lodge the caveat without reasonable cause. I found against the defendant on the principal factual dispute and concluded he had not discharged his onus of proof.

4. [4]
   I found the plaintiffs failed to prove any loss resulting from the lodgement of the caveat.

5. [5]
   The first of these issues occupied much of the court time. The majority of exhibits related to it.

6. [6]
   The plaintiffs, while conceding that the primary rule is that costs should follow the event,^[2] argue that the defendant’s conduct in the proceedings calls for an order^[3] that he pay the plaintiffs’ costs of litigating the first issue. The plaintiffs submit the defendant has failed “on a dominant separable question of fact at the trial on a knowingly false basis”, referring to the reasons of Chesterman J^[4] in Todrell Pty Ltd v Finch (2008) 2 Qd R 95. Had the defendant conceded the issue at the commencement of the proceedings in 2009 they would have been shortened considerably, the trial lasting less than one day. The plaintiffs suggest a division of 65% to the first issue and 35% to the second. 

7. [7]
   The plaintiffs also argue that the defendant should pay the costs of an expert report the plaintiffs obtained shortly before trial because the defendant failed to respond to a notice to admit facts which included the ultimately uncontroversial value of the Ningi property.

8. [8]
   I am not persuaded of the plaintiffs’ second argument. The report must have been commissioned after the parties confirmed readiness for trial and it is not clear the report was commissioned only because of the failure by the defendant to reply to the notice to admit.

9. [9]
   I will return to the plaintiffs’ first argument.

10. [10]
    The defendant submits the plaintiffs have, in effect, wholly failed and costs should follow the event.^[5] The defendant points to certain features of the litigation, including a delay caused by an earlier trial listing being vacated, and asserts the claim was based on an illegal transaction which failed. The defendant also asserts the dispute arose because of the mistaken release by the plaintiffs’ solicitor of the signed contract.

11. [11]
    In reply submissions the Plaintiffs address the vacation of the trial date, referring to affidavits filed on the application to vacate. It appears no party was present at the callover when the trial dates were set. The plaintiffs were ordered to pay the defendant’s costs of the application fixed at $300.00. I am satisfied that that part of the history of the litigation should have no bearing on this decision. The other features pointed to by the defendant that I have mentioned are irrelevant to the decision on costs. I did not find the transaction was illegal, although I think it was unwise. The last point is apparently an attempt to direct responsibility for the failure of the transaction to a mistake by the plaintiffs’ solicitor.

12. [12]
    Upon the claim being made for compensation subsection 130(3) of the Land Title Act 1994 provides that it must be presumed that the caveat was lodged or continued without reasonable cause unless the person who lodged or continued it proves that it was lodged or continued with reasonable cause.

13. [13]
    The defendant’s argument that he bore no onus and alternatively that he had discharged it generated much of the evidence and consumed most of the court time and written submissions.

14. [14]
    The defendant’s evidence did not permit of a finding that he might have been mistaken or that he misunderstood the arrangement between him and Mr Jiminez. My finding that the parties agreed that Mr Bugg would pay $55,000 in addition to the written contract purchase price required the rejection of his sworn evidence that no such arrangement was made. That finding led directly to my conclusion that the defendant did not discharge the onus of proving the caveat was lodged with reasonable cause. That was a serious finding to be made against a party. The legislature apprehended that it might, in appropriate cases, lead to an award of exemplary damages.^[6]

15. [15]
    I consider the case falls broadly into the category of cases such as Theiss v TCN Channel Nine Pty Ltd (No 5 ) [1994] 1 Qd R 156 and Allianz Australia Insurance v Swainson [2011] QCA 179 – where a trial or appeal was clearly divisible into issues, some of which each party succeeded in.  More particularly, I am satisfied the first issue - whether the defendant had lodged a caveat without reasonable cause – was “a particular part” of the proceeding for the purposes of UCPR Rule 684.

16. [16]
    I have considered whether, separately from the defendant’s failure on the first issue, he has been guilty of conduct relating to the litigation such as to permit a departure from the usual rule as to costs, as discussed by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72 at [67 – 70].^[7] Ultimately, I think what is relevant is the effect of his carriage of the litigation on the proceedings, as I have discussed it above.

17. [17]
    Of course, the plaintiffs failed to prove any relevant loss, and so the claim failed. The defendant argues that it was only with the release of the accountant’s report and subpoenaed documents some weeks before trial that the flaw in the plaintiffs’ case was clear.

18. [18]
    Despite an amendment to the pleadings – made by leave after the start of the trial - relevant to the issue of compensation, the plaintiffs did not prove the lodgement of the caveat without reasonable cause produced any loss. Failure to prove loss was fatal to the claim.

19. [19]
    I accept the plaintiffs’ argument that costs should not follow the event. I do not agree, however, that the defendant should pay the plaintiffs’ costs of the first issue. Each party failed to prove its part of the case. It was the plaintiffs, however, who brought the claim and their failure was the failure of the claim. An appropriate outcome would be that the plaintiffs pay 35% of the defendant’s costs on the standard basis to be assessed if not agreed.