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M.T. Franchising Pty Ltd v Murlay Views Pty Ltd & Anor (No 2)[2013] QDC 267

M.T. Franchising Pty Ltd v Murlay Views Pty Ltd & Anor (No 2)[2013] QDC 267

DISTRICT COURT OF QUEENSLAND

CITATION:

M.T. Franchising Pty Ltd v Murlay Views Pty Ltd & Anor (No 2) [2013] QDC 267

PARTIES:

M.T. Franchising Pty Ltd (ACN 009 906 245)

(Plaintiff)

v

Murlay Views Pty Ltd (ACN 142 085 130)

(First Defendant)

&

Catherine Marjorie Doherty

(Second Defendant)

FILE NO/S:

2497/12

DIVISION:

Civil

PROCEEDING:

Trial

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

28 October 2013

DELIVERED AT:

Brisbane 

HEARING DATE:

On the papers

JUDGE:

Kingham DCJ

ORDER:

  1. The defendants must pay the plaintiff the sum of $2,359.18 plus interest calculated at 10% from 21 September 2011 until 18 October 2013;
  2. The plaintiff must pay the defendants’ costs of and incidental to the proceedings, assessed on the standard basis, if not agreed; and
  3. The defendants’ application to stay order 1 until order 2 has been complied with is declined.

CATCHWORDS:

CIVIL – INTEREST – JUDGMENT DEBT - where the plaintiff submitted for interest on the judgment sum calculated – where the court has discretion to award interest – where calculated in terms of the contract interest under the franchise agreement – where the defendant submitted for interest calculated at the standard rate under the Civil Proceedings Act 2011 (Qld).

CIVIL – COSTS – INDEMNITY COSTS – DEFENDANT OFFER TO SETTLE – RULE 361 UNIFORM CIVIL PROCEDURE RULES 1999 (QLD) – where the defendants made an offer to settle the matter before trial – where the plaintiff did not accept that offer – where defendants substantially succeeded in resisting the plaintiff’s claims – where the defendants sought an award of costs on an indemnity basis - where judgment was no less favourable to the defendants than the terms of the offer to settle – where r 361 provides the costs order that must be made unless the court considers another order is appropriate - whether the defendants are entitled to costs – whether the costs should be awarded on the indemnity basis.

Civil Proceedings Act 2011 (Qld) s 58(3).

Uniform Civil Procedure Rules 1999 (Qld), rr 361 & 681.

M.T. Franchising Pty Ltd v Murlay Views Pty Ltd & Anor [2013] QDC 179, cited.

COUNSEL:

Mr. M.F. Wilson for the Plaintiff.

Mr. P.J. McCafferty for the Defendants.

SOLICITORS:

Porta Lawyers for the Plaintiff.

PM Lee & Co. for the Defendants.

1.) Background

  1. [1]
    On 18 October 2013, I ordered Murlay Views Pty Ltd to pay M.T. Franchising Pty Ltd the fees payable under a franchise agreement, for the period from 1 August to 26 August 2011.[1] Otherwise, I dismissed M.T. Franchising’s claim. I made no orders as to quantification of the judgment sum, interests and costs, and I have now received the parties’ written submissions on those matters.

2.) The Claim for Interest

i.) Judgment Sum

  1. [2]
    Under the terms of its franchise agreement, Murlay Views was obliged to pay M.T. Franchising a monthly franchise fee and advertising levy. The franchise fee was calculated as 5% of Murlay Views’ total sales for the relevant month, plus GST. The advertising levy was calculated as 2% of total sales for the relevant month, plus GST.[2]
  1. [3]
    Murlay Views reported its total sales for August 2011 as $36,530.76.[3] Calculated on a pro rata basis, $30,638.70 of that amount can be attributed to the 26 days from 1 August – 26 August 2011. A franchisee fee of 5% of that value is $1,531.94. An advertising levy of 2% on the same value is $612.77. Adding the franchise fee and advertising levy together results in total owed fees of $2144.71. Adding the standard GST rate of 10%, the total sum payable by Murlay Views to M.T. Franchising for franchise fees and advertising levies is $2,359.18.

ii.) Interest

  1. [4]
    The court has discretion to award interest on the whole, or any part, of a judgment sum for the whole, or any part, of the period between the date when the cause of action arose and the date on which judgment was delivered.[4]
  1. [5]
    Murlay Views has submitted that if interest is awarded it should be calculated from 27 August 2011 to 18 October 2013, on the standard scale. M.T. Franchising has asked for interest at the rate specified in the franchise agreement of 10% from 21 September 2011 to 18 October 2013.
  1. [6]
    Under the terms of the franchise agreement, interest was payable under the franchise agreement from 14 days after the fees were payable, i.e. 21 September 2011.[5] Having awarded a principal sum by reference to the franchise agreement, I see no reason not to award at interest at the contractual rate to the date of judgment.

3.) The Claim for Indemnity Costs

  1. [7]
    The standard principle as to costs is that costs “are in the discretion of the courts, but follow the event, unless the court orders otherwise.”[6] However, that position only applies if the Rules do not provide otherwise.[7] Relevantly, Rule 361 provides that if:
  1. (a)
    the defendant makes an offer to settle that is not accepted by the plaintiff and the plaintiff obtains a judgment that is not more favourable to the plaintiff than the offer to settle; and
  2. (b)
    the court is satisfied that the defendant was at all material times willing and able to carry out what was proposed in the offer.
  1. (2)
    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.
  1. [8]
    Murlay Views formally offered to settle these proceedings on 17 April 2013. The offer was on the terms that the defendants pay M.T. Franchising $20,000 inclusive of interest and that the defendants pay M.T. Franchising’s costs on the standard basis, as assessed or agreed.[8] Clearly, that offer is more favourable to M.T. Franchising than the orders made after trial and M.T. Franchising has conceded that rule 361 applies.[9]
  1. [9]
    Murlay Views has submitted that M.T. Franchising should pay the defendants’ costs of the proceeding on an indemnity basis. In support of this submission, the defendants assert that M.T. Franchising prosecuted a case which was known to be hopeless and in wilful disregard of known facts, and that M.T. Franchising entirely failed to particularise the amounts it claimed to be owed to it.[10]
  1. [10]
    M.T. Franchising argues that its case was not without merit and that the court was required to decide the matter on contested evidence regarding the behaviour of all parties during the relevant period.
  1. [11]
    It is certainly true that the Court was required to assess some contested evidence. However, the factual findings drew substantially on documentary evidence that was clear in its terms, particularly as to the view that the Plaintiff took that, as at 26 August 2011, the franchise agreement was at an end.[11]
  1. [12]
    Although the plaintiff has succeeded to recover a small amount under the franchise agreement, it could not be said that it was the successful party in the litigation. It did not succeed in its argument that the franchise agreement was not terminated, except in resisting the defendant’s argument that the agreement was not frustrated. Although the defendants are required to make a payment to the plaintiff, I consider they have substantially succeeded in the litigation, which justifies an order other than the one provided for by Rule 361.
  1. [13]
    There may be a case for indemnity costs, given the plaintiff rejected the defendants’ offer to settle. However, I am not persuaded that the plaintiff’s conduct was so unreasonable or imprudent that I should make that order.

4.) Orders

  1. [14]
    Accordingly, my orders are as follows:
    1. The defendants must pay the plaintiff the sum of $2,359.18 plus interest calculated at 10% from 21 September 2011 until 18 October 2013;
    2. The plaintiff must pay the defendants’ costs of and incidental to the proceedings, assessed on the standard basis, if not agreed.
  1. [15]
    I decline the defendants’ application to stay order 1 until order 2 has been complied with.

Footnotes

[1] M.T. Franchising Pty Ltd v Murlay Views Pty Ltd & Anor [2013] QDC 179.

[2] Exhibit 4 – Franchise Agreement: Amulla Consultancy Pty Ltd & M.T. Franchising Pty Ltd, 22/10/04.

[3] Exhibit 16: Franchise Fee Calculation, August 2011.

[4] Section 58(3) Civil Proceedings Act 2011 (Qld).

[5] Exhibit 4 – Franchise Agreement: Amulla Consultancy Pty Ltd & M.T. Franchising Pty Ltd, 22/10/04, cl. 25.9.

[6] Rule 681 Uniform Civil Procedure Rules 1999 (Qld).

[7] Rule 681(2) Uniform Civil Procedure Rules 1999 (Qld).

[8] Affidavit of Graham Frederick Knight, sworn 16/10/13, para [3] & exhibits A2 & A3.

[9] Submissions on Costs on Behalf of the Plaintiff, received 21/10/13, para [20].

[10] Submissions on Costs on Behalf of the Defendants, received 18/10/13, paras [3] – [6].

[11] M.T. Franchising Pty Ltd v Murlay Views Pty Ltd & Anor [2013] QDC 179, [28], [34], [36], [55] & [79].

Close

Editorial Notes

  • Published Case Name:

    M.T. Franchising Pty Ltd v Murlay Views Pty Ltd & Anor (No 2)

  • Shortened Case Name:

    M.T. Franchising Pty Ltd v Murlay Views Pty Ltd & Anor (No 2)

  • MNC:

    [2013] QDC 267

  • Court:

    QDC

  • Judge(s):

    Kingham DCJ

  • Date:

    28 Oct 2013

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
M.T. Franchising Pty Ltd v Murlay Views Pty Ltd [2013] QDC 179
3 citations
Jump To
Cite 1 - [2013] QDC 179
Cite 2 - [2013] QDC 179
Cite 3 - [2013] QDC 179

Cases Citing

No judgments on Queensland Judgments cite this judgment.

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