DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   On 9 April 2014 I delivered judgment in this proceeding, both on the Claim and the Counterclaim. At that time, I ordered that the parties file, and serve, written submissions as to:

1. (a)
   whether accretions to the deposit are repayable by such a stakeholder as the second defendant and, if not, what order (if any) as to interest should be made;

2. (b)
   short minutes of the terms of a declaration concerning the second defendant’s contraventions; and

3. (c)
   what orders as to costs should be made.

2. [2]
   All parties have complied in a timely way with those submissions.

3. [3]
   Additionally, I sought from all parties further submissions concerning the effect (if any), on those previous submissions that I sought, of ss 388 and 389 of the Property Agents and Motor Dealers Act 2000 (“PAMDA”).

4. [4]
   Again, submissions were received, though only from the plaintiff and the second defendant.

5. [5]
   I will deal with each of the relevant issues raised by me, in turn.

Deposit (Submissions)

6. [6]
   While it is common ground that the deposit of $50,000.00 was not invested – and that, therefore, there was no interest which accrued on it – contrasting submissions have been made on behalf of the parties.

7. [7]
   For their part, the plaintiffs contend that they have been held out of their monies and therefore it is appropriate for them to recover statutory interest, which they have assessed in the sum of $25,410.00 [pursuant to the effect of s 58 of the Civil Proceedings Act 2011 (“CPA”)]. The interest calculation has been done in accordance with the rates applicable to default judgments. 

8. [8]
   For its part, the first defendant contends, by reference to Clauses 6.1 and 6.2 of the relevant Contract, that, since the plaintiffs did not give a direction in accordance with those Clauses, the second defendant, as stakeholder, was not thereby bound to invest the deposit. If such a direction had been given, it is contended that interest would have accrued until the date of judgment. The conclusion that was, then, submitted was that, absent such a direction to the second defendant, no accretions to the deposit exist to be repayable.

9. [9]
   The first defendant then made the supplementary submission that the Court ought not, in its discretion, award interest to the plaintiffs because the contract had provided a procedure for investment and, in circumstances where the plaintiffs did not use that procedure, and could have obtained interest by such use, no interest should be ordered.

10. [10]
    The second defendant, for its part, also relied upon those Clauses in the Contract. Nevertheless, its reliance upon Clause 6.2 shows that the provision made express reference to any interest accruing being required to be paid “to the party entitled to the Deposit upon termination of the Contract”. It should be remarked that the Contract was not held to be terminated but, rather, was ordered to be “avoided” pursuant to statute. It was, however, the second defendant’s submission that it would be “inappropriate” to award statutory interest on the deposit against the second defendant, as stakeholder, where the deposit was not invested pursuant to the Contract by reason of the plaintiffs’ “omission to give notice to invest rather than by reason of any fault on the part of the second defendant” (emphasis added). I will canvass the matter of potential fault later.  

11. [11]
    The plaintiffs made further submissions in reply to the second defendant’s submissions. They contended that it was not to the point whether or not the plaintiffs requested that the monies be invested pursuant to Clause 6.1 of the Contract. They submitted that, as the Contract was “terminated” on 23 January 2009, it was “inappropriate for there to be any investment of the deposit pursuant to this clause” because the authority to authorise which had been derived from the Contract must have ended with termination. Finally, it was submitted, in that reply, that statutory interest award is to compensate the plaintiffs for being held out of monies and the issue as to whether the plaintiffs had lawfully terminated the contract had always been contested by the defendants.

12. [12]
    With respect to the effect of the relevant provisions in PAMDA, the second defendant simply relied upon entries in its audited trust account and the fact that the auditor’s reports for the relevant years noted that the $50,000.00 was held in the trust account (on behalf of the first defendant and the plaintiffs) and that “the matter was under legal proceedings”. Furthermore, it was stated that a copy of such reports by the auditor were provided to the Office of Fair Trading.

13. [13]
    As noted, the first defendant made no submissions on this issue.

14. [14]
    The plaintiff’s submission on this was simply that “nothing turns” on these sections.

Deposit (Consideration)

15. [15]
    First, it is common ground that the plaintiffs did not give any direction by notice in writing to the second defendant, as stakeholder, to invest the deposit under Clause 6.1 of the Contract. But, equally important, Clause 6.1 permits either the plaintiffs, as purchaser, or the first defendant, as vendor, to give that notice. The mere fact that the plaintiffs did not give such notice does not, as between themselves and the first defendant at least, mean that either of those two parties should be placed in a different position from the other.

16. [16]
    Secondly, Clause 6.2 of the Contract determines, other matters apart, to whom the deposit “shall be paid”, at least insofar as it relates to the timing of such payment (being “upon termination of this Contract”). Even more relevant to the present set of circumstances, the operation of Clause 6.2 is dependent upon the contract being “not completed for any reason”. Given that this contract has been “avoided” pursuant to statute, Clause 6.2 has no operation here. Accordingly, the payment of the deposit is, as I have ordered, payment that is pursuant to an order itself made pursuant to statute.

17. [17]
    Thirdly, it is irrelevant, at least with respect to the deposit, that the issue of lawful termination had “always been contested” by the first and second defendants, when termination was not a decided issue in this case.

18. [18]
    Fourthly, no submission has really addressed the important point of the effect of s 389(b) of PAMDA. It required the second defendant to pay the amount of $50,000.00 – it being “in dispute” - immediately “to the court in which the proceeding was started”, upon a notice under s 388(a)(ii) being received. In this particular case, the second defendant, as a “party” to this proceeding must be held to have received a “written notice” that a “legal proceeding had been started in a court to decide who is entitled to the amount in dispute”, if not earlier, at least when served with the plaintiffs’ Claim. It filed its Notice of Intention to Defend on 28 September 2009. Its solicitors’ letter dated 18 February 2010 acknowledges that it had been given a notice of dispute (presumably under s 387). It should be remarked that both s 388 and s 389 are offence provisions under PAMDA. It seems scarcely a possibility that the second defendant’s conduct of simply relying upon a report to the Office of Fair Trading by its auditor complied with those PAMDA provisions, particularly where the auditors’ reports for each of the relevant years noted that “the matter was under legal proceedings”. As noted, the second defendant made no submissions on this aspect of PAMDA.

19. [19]
    Hence, insofar as the first defendant is concerned, there is nothing to gainsay the argument that the plaintiffs have been kept out of the money represented by the deposit which they should otherwise have had. Given the form of the orders made by this Court, it cannot be in contention that such cases as Haines v Bendall (1991) 172 CLR 60 have held that the specific function of an award of interest on damages is to compensate plaintiffs for the detriment they suffer by the delay in receiving damages to which they theoretically became entitled at the time of the defendant’s wrong: at 66 (per the plurality). This is so even though the money should have been paid into court.

20. [20]
    Insofar as the second defendant is concerned, it has breached its obligation to pay money into court: see Galacoast P/L & Anor v McLeod & Anor [2008] QSC 103 at [1]. If it had paid money into court pursuant to the Court Funds Act 1973, interest was required to be paid on such money pursuant to s 9 of that Act. By the Court Funds Regulation 2009, the prescribed rate of interest for s 9 of the Act is that required by s 15 of the Regulation. Other provisions of that Regulation determine how interest is calculated and accrued. Monies are paid out of court pursuant to orders made under s 7 of the Act, s 8 of the Regulation and r 561 of the Uniform Civil Procedure Rules 1999 (“UCPR”).

21. [21]
    If the second defendant had paid the $50,000.00 into court on, say, 28 September 2009 and if such money had been paid out by court order in April 2014, the interest which would have been earned would have been $6,999.27: see Annexure “A”.

22. [22]
    Although the plaintiff has calculated interest from 23 January 2009 through to 9 April 2014 pursuant to s 58 of the CPA totalling $25,410.78, given the particular circumstances that require such deposits in cases such as this to be paid into court, I determine that the appropriate amount of interest that the plaintiffs would theoretically have become entitled to is, simply, $6,999.27. I therefore intend to order that that sum be paid (by both defendants) to the plaintiffs as interest pursuant to s 58 of the CPA.

Declaration concerning the second defendant

23. [23]
    The plaintiff contends that the declaratory orders that should be made should be similar to the orders made by Spender J in Ramensky v Demagogue P/L [1992] FCA 115 (at first instance). 

24. [24]
    The first defendant has made no submission about the form of the declaration.

25. [25]
    The second defendant submitted that the declaration should be in the following terms:

“The Court declares that the second defendant’s representation that the subject property had ‘rear street access’ without clarifying such access was misleading or deceptive conduct in contravention of ss 52 and 53A of the Trade Practices Act 1974 and s 40A of the Fair Trading Act 1989.”

26. [26]
    As can be seen from my review of ACCC v Cement Australia P/L [2014] FCA 148, the relief granted must be “carefully formulated”. The plaintiffs’ suggested terms do not do that. Given that the second defendant’s terms are more specific as to the facts in question and, perhaps more importantly, the fact the second defendant so submits that it be in the terms just outlined convince me that the order that I will make will be in those terms (as adjusted by me to reflect more accurately my findings).

Costs orders (generally)

27. [27]
    In general terms, there is no reason in this case why costs should not “follow the event”, in accordance with r 681(1) of the UCPR. 

28. [28]
    Nevertheless, the first defendant has submitted that the appropriate order as to costs is that each defendant pay 50% of any costs awarded and that, for the same reason (namely, my finding that the second defendant bears significant responsibility for the necessity for orders to be made), there should be no order that the first defendant pay the second defendant’s costs.

29. [29]
    As for the second defendant, it submits that the second defendant prepared for and conducted the trial on the basis that the only relevant claim by the plaintiffs against it was damages and that, since the plaintiffs “have failed to recover any amount by way of damages against the second defendant”, the second defendant “has been wholly successful in defending the proceeding”. As to the fact that the proposed declaration is to be made along with the consequences of making it, the second defendant submitted that “both” the declaration “and the order” are “unnecessary”. This is contended to be as a result of the plaintiffs having “no legal or commercial interest in asserting the invalidity of the contract against the second defendant”. It is further contended that the proposed refund order is “unnecessary” because there was never any suggestion that the second defendant might withhold the deposit. The fallback submission for the second defendant is that, nevertheless, in view of the findings of contravening conduct, the second defendant did concede that a proper exercise of the discretion would be to make “no order as to costs between it and the plaintiffs”. Furthermore, as to costs between the defendants, it submitted that, in accordance with the general right of an agent to be indemnified by its principal against liabilities incurred in the reasonable performance of its agency, it would be “within discretion” to order the first defendant to pay the second defendant’s costs of the proceeding.

30. [30]
    The correspondence relied upon by the second defendant as to “offers” made has as its primary basis that the plaintiffs should discontinue the proceeding against the second defendant. Unsurprisingly, in light of the findings against the second defendant that I made, the plaintiffs rejected that. The first defendant asserted that it would accept the offer “if it was accepted” by the plaintiffs.

31. [31]
    Given that history and the successful outcome so far as the plaintiffs are concerned of their action against the second defendant, the “offers” have no relevance to the determinations that I intend to make.

Plaintiffs’ costs of the Claim and Counterclaim

32. [32]
    Insofar as the costs should be awarded against the defendants, the first defendant’s argument of a payment each of 50% would seem to be an argument of no substance. It is clearly held by Cooper J in Thiess Watkins White Construction Ltd (in liq.) v Witan Nominees (1985) P/L [1992] 2 Qd R 452 that an order for the payment of costs by two or more persons creates a joint and several liability: at 453. That, as Cooper J points out, means that an order for costs against two persons may be enforced against them jointly, or against either of them separately: also at 453. That, as Cooper J also discusses, is the general rule. As to the exception to that general rule – such as one defendant conducting a separate and distinctive defence which incurs costs which cannot be attributed to the joint conduct of the defendants in the defence of the action – no such exception to that general rule applies here: at 454. 

33. [33]
    The limitation considered by the Full Court of the Federal Court in Probiotec Ltd & Ors v University of Melbourne & Ors (2008) 166 FCR 30 also does not arise here. Besanko J, for instance, concluded that it is necessary to consider not only whether one defendant has put forward a separate defence but also any other factor relevant to that defendant’s conduct and the effect of that conduct on the incurring of costs by the plaintiff: at 52 [91]. 

34. [34]
    This “general” approach is supported by the decision of McCallum J in Perigo v Workers Compensation Nominal Insurer & Anor (No 3) [2013] NSWSC 6 at [3] – [6]. 

35. [35]
    In the end, considering the way that the case at trial was run (in the context of the pleadings providing the designated form for that), there is no additional cost that either defendant caused either in her or its defence or with respect to the other defendant. In many ways, the defences which were run by both defendants revealed a very common approach to the denial of liability.

36. [36]
    Finally, it is clear from relevant authority that any enforcement of a right of indemnity must be by way of claim; or, even, counterclaim: see Halsbury’s Laws of England, 4^th ed., vol. 1, para [111]. Additionally, rights of indemnity can be excluded by express terms of the relevant contract between the principal and agent.  None of these matters have been addressed here. Thus, I do not intend to accept the first defendant’s submission that each defendant pay 50% of the costs awarded to the plaintiffs. And I do not intend to make an order such as that sought by the second defendant that no order as to costs should be made between it and the plaintiffs. I reach this last conclusion on the basis not only of the declaration that I intend to make concerning it but also on the basis of the default by it to comply with its statutory obligations pursuant to PAMDA, which has necessitated the Order as to interest. If the second defendant had, as required, paid the deposit into court, it could have been paid out only by a court order. 

37. [37]
    With respect to the counterclaim, since the plaintiffs have been successful in obtaining judgment against the first defendant on it, the costs of the counterclaim must be paid by the first defendant, alone (as it does not engage the second defendant), to the plaintiffs.

Costs as between defendants

38. [38]
    Although this is an issue raised by the second defendant, it is to be seen against a background where no proportionate liability finding was sought in the eventual submissions of either defendant - or the plaintiffs - although originally raised in the pleadings. Contribution was unnecessary to be considered.

39. [39]
    Thus, except for the assertion of the relationship of principal and agent between the first defendant and the second defendant, there is nothing in the pleadings insofar as the judgments given in this case are concerned which leads to the necessity for any resolution of any position between the defendants, at least as between themselves. There is, for instance, no basis upon which an order could be made that the first defendant pay the second defendant’s costs (for the reasons canvassed earlier concerning the absence of any issue as to indemnity being raised on the pleadings).

Annexure A - Interest payable pursuant to Court Funds legislation