SPJ Nominees Pty Ltd v Blackwatch Sports Fishing Boats Pty Ltd (No 2)
[2012] QDC 97
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- Unreported Judgment
- Appeal Determined (QCA)
- SPJ Nominees Pty Ltd v Blackwatch Sports Fishing Boats Pty Ltd (No 2)[2012] QDC 97
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SPJ Nominees Pty Ltd v Blackwatch Sports Fishing Boats Pty Ltd (No 2)[2012] QDC 97
SPJ Nominees Pty Ltd v Blackwatch Sports Fishing Boats Pty Ltd (No 2)[2012] QDC 97
DISTRICT COURT OF QUEENSLAND
CITATION: | SPJ Nominees Pty Ltd and Ors v Blackwatch Sports Fishing Boats Pty Ltd and Anor (No 2) [2012] QDC 97 |
PARTIES: | SPJ NOMINEES PTY LTD and CONWAY SAVIS and ALISON SAVIS v BLACK WATCH SPORTS FISHING BOATS PTY LTD and ANDREW WILLIAM JOHNSON |
FILE NO/S: | DC 167/2010; SC 47/2010 |
DIVISION: | Civil |
PROCEEDING: | Proceeding pursuant to Supreme Court orders for assessment of damages, interest and costs |
ORIGINATING COURT: | Townsville |
DELIVERED ON: | 15 May 2012 |
DELIVERED AT: | Townsville |
HEARING DATE: | On the papers |
JUDGE: | Dorney QC, DCJ |
ORDER: |
|
CATCHWORDS: | Costs – r 684 UCPR – whether exceptional circumstances – whether “failure to mitigate” finding triggers rule – whether, and how, the discretion should be exercised Uniform Civil Procedure Rules 1999 (Qld), rr 681, 684 AHR Constructions Pty Ltd v Maloney [1994] 1 Qd R 460 Alliance Australia Insurance Ltd v Swainson [2011] QCA 179 BHP Coal Pty Ltd & Ors v O & K Orenstein & Kopple A G & Ors (No 2) [2009] QSC 64 Colburt v Beard [1992] 2 Qd R 67 Forster v Farquhar [1893] 1 QB 564 J Wright Enterprises Pty Ltd (in liquidation) v Port Vallidu Pty Ltd (No 2) [2010] QSC 214 Kilvington v Greig & Ors (No 2) [2011] QDC 37 Mills v Mills (No 2) [2008] QSC 334 Tabtill Pty Ltd v Creswick; Creswick v Creswick & Ors [2012] QCA 78 Thiess v TCN Channel Nine Pty Ltd (No 5) [1994] 1 Qd R 156 Todrell Pty Ltd v Finch (No 2) [2008] 2 Qd R 95 Yara Nipro Pty Ltd v Interfert Australia Pty Ltd [2010] QCA 164 |
COUNSEL: | L R Middleton for the Plaintiffs |
SOLICITORS: | Lee Turnbull & Co for the Plaintiffs |
Introduction
- [1]On 24 April 2012 I delivered the Reasons for my decision as to the assessment of damages I made in this proceeding: SPJ Nominees P/L & Ors v Blackwatch Sports Fishing Boats P/L & Anor [2012] QDC 66.
- [2]I made an order on that occasion that all parties have leave to file, and serve, written the submissions on costs. As a result of the plaintiffs indicating that they accepted an intimation that I had made in my reasons concerning the potential fixing of such costs at 80% of the plaintiffs’ costs to be assessed on the standard basis, they requested further time to respond if necessary.
- [3]The defendants’ Outline of Submissions on Costs dated 1 May 2012 did raise, at least in the context of a costs argument, some little complexity. Accordingly, I gave leave to the plaintiffs to file any response to those Submissions, designating a relatively short period of response time. I have now received those Response Submissions. The defendants, having sought a similar indulgence for a reply, were also granted leave to do so, and have filed their Reply Submissions.
Effect of rule 684 of UCPR
- [4]Rule 684 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) deals with the issue of costs of something less than a party’s full case. This rule was previously numbered r 682. It states that a court “may” make an order for costs “in relation to a particular question in, or a particular part of, a proceeding”. By sub-rule (2), for r 684(1) a court may declare “what percentage of the costs of the proceeding is attributable to the question or part of the proceeding to which the order relates”.
- [5]The substance of the effect of this particular rule, considering nearly all the cases to that time, was undertaken by Chesterman J (as he then was) in Todrell Pty Ltd v Finch (No 2).[1]
- [6]Necessarily, Chesterman J first turned to Forster v Farquhar[2] which considered the English rule equivalent to the former rule O 91, r 3 of The Rules of the Supreme Court: at 97 [14]. Then, in turn, Chesterman J referred to a consideration of that case in Colburt v Beard[3] (by Thomas J, at 77) and the comment by the Full Court in Thiess v TCN Channel Nine Pty Ltd (No 5)[4] that the approach in Colburt had “much to commend” it: at 98 [15]-[16].
- [7]The conclusions reached by Chesterman J, which are relevant here, from a consideration of those decisions, are: that the “new” rule is to the similar, general, effect of the “old” rule, with that change in wording “being no doubt deliberate”, conferring a wider discretion than the former rule which was limited to “issues”; and that a “head of controversy” or a “unit of the litigation”, if identifiable, gives rise to a discretion to separately award costs in relation to that question: at 97-98 [13] and [17].
- [8]On the matter of what should be ordered in Todrell, Chesterman J stated that he had not found it easy to determine whether the considerations that he canvassed should deprive the successful defendants of their costs on the identified issue, or whether it should result in an order that they pay the plaintiff’s costs of that issue, as he was conscious of the principles enunciated (including those specific to totally successful defendants) and of the need for caution and hesitancy, although he decided in the end that the conduct of such defendants and that of their solicitor should be “sanctioned”: at 100 [25].
- [9]Subsequently, in BHP Coal Pty Ltd & Ors v O & K Orenstein & Kopple A G & Ors (No 2)[5] McMurdo J made the following observations:
- the starting point is the general rule, expressed in r 681(1) of the UCPR, that costs should follow the event;
- r 684 provides an exception to that general rule;
- necessarily, the circumstances which would engage r 684 are “exceptional” circumstances and the enquiry must be: “what is it about the present case which warrants a departure from the general rule?; and
- ordinarily, the fact that a successful plaintiff fails on particular issues does not mean that the plaintiff should be deprived of some of the plaintiff’s costs, although it may be appropriate to award costs of a particular question, or part of a proceeding, where that matter “is definable and severable and has occupied a significant part of the trial”;
: at [6]-[8].
- [10]As summarised by McGill SC DCJ in Kilvington v Greig & Ors (No 2)[6], the effect of those authorities is that the starting point is that costs follow the event and the question is whether there is sufficient reason to depart from that position to any extent and, in deciding whether a departure is justified in a particular case, it is important to bear in mind the fundamental principles of fairness favouring the prima facie approach stipulated by the rule, so a court will hesitate before departing from it and will depart only in unusual cases: at [37].
- [11]More recently, Fraser JA in Alliance Australia Insurance Ltd v Swainson[7] observed that the general proposition that costs should follow the event except in “special circumstances” derives support from a number of decisions of McMurdo J, referring, amongst others, to those noted by the Court of Appeal in Yara Nipro Pty Ltd v Interfert Australia Pty Ltd[8] at [8]: at [4]. Interestingly, Fraser JA went on to note, by reference to an earlier authority of the Court of Appeal, that there are cases, at least on appeal, in which results on issues are taken into account, instancing a limitation to the costs of a successful appellant to the issue of quantum where that appellant had unsuccessfully appealed on liability and contributory negligence: at [6].
- [12]Lastly, in Tabtill Pty Ltd v Creswick; Creswick v Creswick & Ors[9], the Court of Appeal held that, in circumstances where a party had complete success on two major claims which took up the bulk of the evidence at trial and the appeal hearing whilst other claims at the trial failed (and were not subject of the appeal), it did not mean that such an appellant should be deprived of his costs, or receive only a proportion of his costs: at [6]. More particularly, the Court remarked that, while there were other aspects of that party’s claim which were abandoned late, or in which the party ultimately did not succeed, it is inappropriate for a court “to keep a register of the wins and losses”: at [9].
- [13]Some final concluding remarks should be made. First, as was stated by Applegarth J in Mills v Mills (No 2)[10], with reference to Todrell (among other decisions), whilst it would have been possible in that case to make costs orders in relation to issues, this often is “not an attractive or convenient course”, noting that the assessment of costs on an issues’ basis is complicated and costly: and, if possible, the court should avoid making multiple costs orders: at [23]. Secondly, White J (as she then was) in J Wright Enterprises Pty Ltd (in liquidation) v Port Vallidu Pty Ltd (No 2)[11], in reference to r 684 of the UCPR, held that there was “good reason” to limit that rule to “exceptional” cases: at [14]-[16].
- [14]While I have been referred, particularly by the defendants, to other cases, they do not appear to advance the understanding of the issues further than the cases to which I have made specific reference.
Mitigation
- [15]It is of some assistance in determining how the principles considered above should be applied in this proceeding that a party in breach – here, the first defendant (with consequences for the second defendant) – has the onus of establishing a failure to mitigate: see, for instance, AHR Constructions Pty Ltd v Maloney[12] at 467, per Thomas J, who made reference to the recognition that the burden of introducing evidence (as distinct from the ultimate burden to establish an issue) may shift constantly during a case according to whether one scale of evidence or the other “preponderates”.
- [16]The presence of such an onus in this proceeding makes it easier to identify a head of controversy or a unit of the litigation.
- [17]It is clear from my Reasons in SPJ Nominees that the defendant did succeed, substantially, on the contention concerning mitigation that it was unreasonable for the plaintiffs not to further negotiate: see, for instance, at [129].
Application of the relevant costs principles
- [18]First, there is no issue between the parties that the intimation given by me at [140] of my Reasons in SPJ Nominees is inappropriate – at least in so far as it goes.
- [19]Secondly, while the plaintiffs contend that that should be the limit of any variation from the starting point (being the general rule that costs should follow the event), the defendants, utilising, in particular, r 684 of the UCPR contend: that each of the sets of parties “ought to receive an amount of 50% of their costs of the trial”, because of the defendants’ success on the mitigation question; and, that “(o)ffsetting those amounts will lead to a nett result” of the plaintiffs recovering 25% of their costs “of the proceeding” “subject to after disallowance of 40% of them in respect of costs associated with Mr Blundell”.
- [20]I confess I am puzzled by part of the conclusions contended for by the defendants. There is nothing in the material given to me which suggests that the absolute costs on both sides – even if I could, somehow, take the costs orders so far made into account as part of the “proceeding” - are such that an offset of 50% of each party’s costs would have a net result of the plaintiff recovering 25%. Of course, if that is so, then a disallowance of a further 40% does not follow logically from the disparity [on the basis of the plaintiffs being the subject of a disallowance of 20% and the defendants being the subject of an allowance of that figure (because of the rejected evidence of Mr Blundell)].
- [21]The plaintiffs, for their part, did not address that final contention head on but, rather, took issue with the nature of the evidence and the degree of success that was contended for, with respect to that evidence, by the defendants.
- [22]An initial conclusion that can be reached is that while Mr Blundell’s evidence was rejected as to its admissibility concerning matters of expertise, it clearly was the substantial basis of the evidence given by Mr Manwarring (who was the defendants’ expert and who gave the only admissible evidence on cost and value). Accordingly, there are aspects of the preparation for, and conduct of, the trial which much reflect the fact of that value that Mr Blundell’s evidence had in determining the outcome.
- [23]It must also be recognised that the defendants’ Amended Statement of Issues, a pleading which went to documenting the “defence” to the issue of damages for breach, demonstrated some complexity and raised many matters other than a failure to mitigate.
- [24]Furthermore, the defendants’ case involved many legal arguments which were, in general terms at least, unsuccessful.
- [25]Lastly, it is clear that my determination on the particular question of a failure to mitigate, while definable and severable, concerned only part of the evidence led by the major witnesses for the defendants (apart from Mr Manwarring) of Mr Johnson and Mr Chipp. Also, while Mr Somogyi was an important, but brief, witness for the defendants on the question of mitigation, the evidence of Mr Cran did not feature in the eventual determination.
- [26]Thus, in determining how significant the question of a failure to mitigate was in the context of already indicating the lack of utility of Mr Blundell’s evidence (insofar as it relied upon his expertise), a “broad approach” only is possible: see BHP Coal at [15]. Thus, the declaration that I will make necessarily includes the separate question of mitigation as part of the overall determination of the appropriate apportioning of costs.
- [27]I have concluded - recognising that if possible the court should avoid making multiple costs orders - that the number of such orders should, indeed, be limited.
- [28]My conclusions, therefore, are as follows:
- there is a proper basis for departing from the general rule because of the exceptional circumstances of the defendants succeeding on the definable and severable question of the plaintiffs’ failure to mitigate;
- necessarily, a broad approach must be taken;
- given the many other matters on which the plaintiffs succeeded, it is appropriate in this case to make one order as to costs (particularly where I have not found it easy to determine whether the principles canvassed above should lead to a deprivation of the plaintiffs’ costs, or an order that they pay costs, of that question), being conscious of the need for caution and hesitancy in circumstances where there was no necessity for sanctioning anybody’s conduct; and
- assessing the actual time spent on all of the different issues or questions (or parts), and the utility of the expert and non-report evidence of Mr Blundell at the trial of the assessment, and recognising the associated preparation costs, I declare that the plaintiffs recover their costs of the trial for the assessment of damages (and interest), fixed at 50% of the plaintiffs’ costs, to be assessed on the standard basis.