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Scholfield v Scholfield & Anor (No. 2)[2014] QDC 243

Scholfield v Scholfield & Anor (No. 2)[2014] QDC 243

DISTRICT COURT OF QUEENSLAND

CITATION:

Scholfield v Scholfield & Anor (No 2) [2014] QDC 243

PARTIES:

STUART ASTLEY SCHOLFIELD

(plaintiff)

v

JULIAN ASTLEY SCHOLFIELD and BERWICK JOHN ASTLEY SCHOLFIELD

(defendants)

FILE NO/S:

542/08

DIVISION:

Civil

PROCEEDING:

Trial

ORIGINATING COURT:

District Court

DELIVERED ON:

31 October 2014

DELIVERED AT:

Brisbane

HEARING DATE:

15 October 2014

JUDGE:

Farr SC DCJ

ORDER:

  1. The plaintiff is ordered to pay 75% of the defendants’ costs of and incidental to the claim to be assessed on the indemnity basis for the period up to and including 15 December 2011. 
  2. I will hear the parties as to costs regarding these applications.

CATCHWORDS:

COSTS – where neither party filed submissions regarding an order for costs within the time directed – whether filing of submissions seeking costs constituted a step in a proceeding – whether the filing of an application for costs constituted a step in a proceeding – where a proceeding ends upon judgment – whether that the delay by the defendants in obtaining costs evidenced an abandonment – whether the failure to comply with r 5 should result in no order for costs – where the court has an unfettered discretion – where the delay is attributable to both parties – where delay due to dilatoriness of legal representatives and death of the defendants’ solicitor – where the plaintiff submitted any order for costs would occasion prejudice but did not adduce any evidence in support – where the justice of the situation requires an order for costs to be made.

COSTS – where defendants sought an order on an indemnity basis – where a 25% reduction was appropriate to account for the applicant’s unsuccessful counterclaims.

COUNSEL:

S J English for the plaintiff

L A Stephens for the defendants

SOLICITORS:

Direct access brief for the plaintiff

Trevor Hauff Lawyers for the defendants

  1. [1]
    Judgment was given in this matter on 15 December 2011 in the presence of the legal representatives for all parties.
  1. [2]
    After the orders were made, counsel for the plaintiff asked that some time be allowed for the preparation and submission of written submissions as to the issue of costs. A direction was then given that any submissions regarding costs should be filed by the end of January 2012.
  1. [3]
    Neither party filed any submissions by that date.
  1. [4]
    On 8 August 2014 the defendants filed an application seeking the following orders:
  1. The defendants be granted costs;
  2. The defendants be granted costs on an indemnity basis;
  3. The indemnity costs as awarded be set pursuant to r 687 UCPR at $114,478.80, the amount paid by the defendants to their lawyers who acted in the matter being reasonable costs incurred in the matter;
  4. The defendants be further awarded interest on the sums awarded to them on 15 December 2011 up to the date of judgment, being the period from 11 May 2011 to the date of judgment 15 December 2011, being a further 218 days at $69.90 per day and being $15,238.20 ($7,619.10 for each defendant);
  5. Costs of this application;
  6. Interest.
  1. [5]
    The matter came before me for hearing and determination on 18 August 2014 but was adjourned with the consent of both parties due to late service.
  1. [6]
    On 30 September 2014 the defendants filed a second application seeking the following orders:
  1. A declaration that the submissions on costs requested by his Honour in this matter does not constitute a step in the proceedings or alternatively is not a proceeding for the purposes of Rule 389(2) of the Uniform Civil Procedure Rules 1999 (UCPR);
  2. In the alternative, if the Court considers that submissions in relation to costs constitutes a step in the proceedings, for leave by the Court pursuant to r 389(2) of the UCPR to proceed;
  3. Costs;
  4. Interest.
  1. [7]
    The matter came before me for hearing and determination on a second occasion on 15 October 2014. At that hearing, counsel for the defendants advised the Court that the application of 8 August 2014 insofar as it relates to the seeking of order 4 is to be withdrawn. Accordingly, that matter need not be further addressed.
  1. [8]
    The plaintiff has submitted that the orders sought should not be made because:
  1. the defendants have failed to take a step in the proceeding for greater than two years and therefore a new step may not be taken without an order of the Court; and/or
  2. the defendants have abandoned their rights to costs as evidenced by the lengthy delay in seeking an order for costs; and/or
  3. that if costs are to be ordered, the order should be that the plaintiff pay 50% of the defendants’ costs to be assessed.

Substantive matter

  1. [9]
    In the substantive matter the plaintiff sought the repayment of sums of money totalling $70,419.83. This claim was dismissed. The defendants, by way of counterclaim, sought a declaration that the plaintiff’s claim had been settled and that there had been accordant satisfaction, or alternatively, sought an order in the amount of $60,000 from the plaintiff as money held and received. These claims were also dismissed. The defendants also sought a declaration that each defendant was entitled to $127,578.64 held on account of the action. That counterclaim was upheld.

Issues

Is the filing of submissions regarding costs a “step” in the proceeding?

  1. [10]
    Rule 389(2) of the Uniform Civil Procedure Rules 1999 (UCPR) states:

“If no step has been taken in a proceeding for 2 years from the time the last step was taken, a new step may not be taken without the order of the court, which may be made either with or without notice.”

  1. [11]
    The word “step” is not defined in the UCPR.
  1. [12]
    Subsection (3) of r 389 states:

“For this rule, an application in which no order has been made is not taken to be a step.”

  1. [13]
    Both parties agree that the last step taken in this matter occurred on 15 December 2011 when judgment was delivered. I am not as confident as they in that regard, given that the “step” would have been one taken by the Court and not the parties, but nothing turns on this issue and I am content to proceed on the basis that 15 December 2011 was the last time a step was taken.
  1. [14]
    The defendants submit that the filing of submissions seeking costs does not amount to a “step in a proceeding”. In support of that submission they rely (in part) on the following statement of McPherson JA in Fraser Property Developments Pty Ltd v Sommerfield & Ors[1]:

“[7]On the footing that the ‘proceeding’ was Sommerfeld’s application to the Supreme Court for an order to that effect, the first question is whether, by making submissions to this Court in support of the appeal against the order on that application, the Council took a fresh step in that proceeding. No authority has been found suggesting that mere argument in support of an appeal amounts to taking a ‘fresh step’ in the proceeding. I am disposed to the view that it is not. The order of the court allowing the appeal may conceivably be a fresh step in the proceeding; but it was taken not by the ‘creditor’, if that was what the Council was, but by this Court, and so is not within the prohibition imposed by s 58(3)(b).”

  1. [15]
    The predecessor to r 389 was O 90 r 9 which referred to “the last proceeding was taken”.  In Concord Park Pty Ltd v Allied Organik Ltd[2], McGill SC DCJ said at paragraph 9:

“… I do not agree that the change in terminology in the UCPR was intended to produce some change in the substance of the applicable law. The change is explicable in order to avoid confusion with the word ‘proceeding’ which is used in the UCPR as a generic term for any lis pendens. It superseded the terms ‘action’ and ‘matter’, among others. The preservation of the word ‘proceeding’ in the sense in which it was used in O 90 r 9 would have required r 389 to refer to a ‘proceeding in the proceeding,’ which would have been at least inelegant, if not ambiguous.”

  1. [16]
    As I understand it, the plaintiff has not submitted that the filing of submissions constitutes a step in the proceedings, but rather asserts that the “step” is constituted by the filing of the application for costs.
  1. [17]
    Given the comments of McPherson JA as detailed above, I agree that making submissions would not constitute a step. The real issue is whether the filing of an application for costs constitutes a step in the proceeding.

Is an application for an order for costs a “step” in the proceeding?

  1. [18]
    It must be noted that when judgment was delivered on 15 December 2011 counsel representing the defendants did not seek or in fact make any submission regarding, an order for costs. The application for costs was first made on 8 August 2014.
  1. [19]
    The defendants submit that such an application does not constitute a step in the proceeding, because the proceeding ended when judgment was delivered in their favour. It is argued, that there is no current proceeding and therefore r 389(1) and (2) has no application. 
  1. [20]
    The defendants further submit that as r 389(3) states that “an application in which no order has been made is not taken to be a step”, then for that reason also, r 389(1) and (2) has no application.
  1. [21]
    The word “proceeding” is not defined in the rules. McPherson JA however has provided some guidance as to the meaning of that term in Citicorp Australia Ltd v Metropolitan Public Abattoir Board[3]:

“It may I think be accepted that to constitute a ‘proceeding’ the act or activity must have the characteristic of carrying the cause or action forward.  It may, as Stable J described in Kaats v Caelers [1966] Qd R 482, 489, be ‘some step taken toward the judgment or relief sought in the action’; or ‘taken with a view to continuing the litigation between the parties to it’: Spincer v Watts (1889) 23 Q.B.D. 350, 353, per Lindley L.J.  The word ‘is one that suggests something in the nature of a formal step in the prosecution of an action’: see Mundy v Butterly Co. (1932) 102 L.J.Ch. 23, 26.”

  1. [22]
    That definition tends to suggest that a proceeding ends upon judgment. Confirmation of that can be found in the rules themselves. Rule 682 states:

682General provision about costs

  1. (1)
    The costs a court may award—
  1. (a)
    may be awarded at any stage of a proceeding or after the proceeding ends; and
  1. (b)
    must be decided in accordance with this chapter.
  1. (2)
    If the court awards the costs of an application in a proceeding, the court may order that the costs not be assessed until the proceeding ends.”
  1. [23]
    That rule anticipates that an award of costs can be made after a proceeding ends. If however, a proceeding does end until the award of costs is made, then r 682(1)(a) would be meaningless insofar as the passage “or after the proceeding ends” is concerned.
  1. [24]
    Accordingly, the application for an order for costs in this matter cannot be a step in the proceeding because the proceeding ended on 15 December 2011. The word “step” in the phrase “… a new step may not be taken without the order of the court…” in r 389(2), when read in context, clearly and unambiguously means a “step in the proceeding”. 
  1. [25]
    It follows that r 389 has no application to this issue and an order of the court is not required. 

Have the defendants abandoned their rights to costs?

  1. [26]
    The plaintiff has submitted that a delay of two years seven months by the defendants in obtaining the costs component of their judgment unequivocally evidences their abandonment of that part of the fruits of their judgment.
  1. [27]
    Counsel for the plaintiff has submitted that the law of abandonment concerning contracts is apposite. In support of that submission, he also relies on r 5 which states:

5Philosophy—overriding obligations of parties and court

  1. (1)
    The purpose of these rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.
  1. (2)
    Accordingly, these rules are to be applied by the courts with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of these rules.
  1. (3)
    In a proceeding in a court, a party impliedly undertakes to the court and to the other parties to proceed in an expeditious way.
  1. (4)
    The court may impose appropriate sanctions if a party does not comply with these rules or an order of the court.

Example—

The court may dismiss a proceeding or impose a sanction as to costs, if, in breach of the implied undertaking, a plaintiff fails to proceed as required by these rules or an order of the court.

  1. [28]
    I do not need to examine the law in relation to the abandonment of a contract in this decision. There is no dispute that in appropriate circumstances it can be reasonably inferred that parties to a contract have conducted themselves in such a manner as to abandon or abrogate the contract. Whether that principle can be applied to litigation is another question entirely.
  1. [29]
    The plaintiff has referred to no authority supporting the proposition. Furthermore, the UCPR does not provide for it when it could easily have done so, as for instance, it has done for Abandonment of mediation in r 330. More importantly, at least one fundamental difference between parties to a contract and parties to litigation, is that in litigation, the successful party has an entitlement to costs.[4]
  1. [30]
    In such circumstances, it seems to me to be nigh on impossible to infer that the successful litigant has abandoned the right to costs, as opposed to, the deleteriousness being the result of an oversight or forgetfulness or incompetence.

Should the failure to comply with r 5 result in no order for costs?

  1. [31]
    There is no doubt that the court has an unfettered discretion in relation to the awarding of costs, although the discretion must be exercised judicially.[5] A relevant judicial consideration may, in appropriate circumstances, include non-compliance with r 5. 
  1. [32]
    Rule 5 provides a two-pronged strategy. Rule 5(2) focuses on the court’s application of the UCPR, whilst r 5(3)-(4) impacts upon the parties’ conduct of the proceeding. 
  1. [33]
    Once again, the term “proceeding” is involved. Putting that issue to one side however, r 5(1) provides that the purpose of the rules is to facilitate the just and expeditious resolution of issues.  The question arises therefore, is the delay in this matter so significant that it overrides the entitlement that the applicants have to a costs order?  In other words, does the lack of expeditious conduct override what might otherwise be considered to be a just outcome?
  1. [34]
    Although I have determined that r 389 has no application in this matter, Atkinson J in Tyler v Custom Credit Corporation Ltd[6] set out a number of factors which may be considered in determining where the interests of justice lie in determining an application under r 389 (my underlining). Some of those considerations would nevertheless be relevant in this matter and offer some guidance as to the approach that I should adopt.  They are:
  1. (i)
    how long ago the events alleged in the Statement of Claim occurred and what delay there was before the litigation commenced;
  1. (ii)
    how long ago the litigation was commenced and what if any causes of action were added;
  1. (iii)
    what prospects the plaintiff has of success in the action;
  1. (iv)
    whether or not there has been disobedience of Court Orders or Directions;
  1. (v)
    whether or not the litigation has been characterised by periods of delay;
  1. (vi)
    whether the delay is attributable to the Plaintiff, the Defendant, or both;
  1. (vii)
    whether or not the impecuniosity of the Plaintiff has been responsible for the pace of the litigation and whether the defendant is responsible for the Plaintiff’s impecuniosity;
  1. (viii)
    whether the striking out of the Plaintiff’s claim would conclude the litigation between the parties;
  1. (ix)
    how far the litigation has progressed;
  1. (x)
    whether or not the plaintiff’s lawyer being dilatory has caused the delay.  Such dilatoriness will not be sheeted home to the client, but may be.  Delay for which an application for leave to proceed is responsible is regarded as more difficult to explain than delayed by his or her legal advisers;
  1. (xi)
    whether there is a satisfactory explanation for delay;
  1. (xii)
    whether or not the delay has resulted in prejudice to the defendant leading to an inability to ensure a fair trial.
  1. [35]
    To properly apply these considerations, I need to list a chronology of relevant events:
  1. 15 December 2011 – judgment delivered and parties given until the end of January 2012 to file written submissions regarding costs.
  2. 25 March 2012 – the applicant’s then solicitor Mr John Potts, died.[7]
  3. September 2012 – the death of Mr Potts was advertised in Proctor.[8]
  4. 30 June 2013 – the plaintiff’s solicitor, Mr Bruce Hutcheon retired from practice due to ill health.[9]
  5. 9 November 2013 and 22 November 2013 – solicitors for the defendants wrote two letters to the plaintiff’s solicitor (not knowing he had retired) regarding, in part, the issue of costs.[10] No reply was received.
  6. 25 July 2014 – the defendants’ current solicitor, Mr Trevor Hauff became involved in this matter.[11]
  7. 29 July 2014 – Mr Hauff wrote to Potts & Co., solicitors for the defendants seeking the file.[12]
  8. 8 August 2014 – the defendants filed an application seeking an order for costs.
  9. 18 August 2014 – the returnable date for the application, but the date was adjourned due to late service of notice.
  10. 30 September 2014 – filing of an application for declaratory relief.
  11. 30 September 2014 – the hearing of the applications.
  1. [36]
    As I have already said, neither party filed any submission regarding an order for costs within the time directed. That tardiness was overtaken seven weeks later by the death of the defendants’ solicitor. Even though the law firm continued to practice, I have no doubt that the timing of Mr Potts’ death played some considerable significance in the overall delay in bringing this matter back before the court. That delay was exacerbated by the retirement of the plaintiff’s solicitor some 15 months later.
  1. [37]
    The plaintiff has not suggested that the litigation had been characterised up to that point of time by periods of delay, hence this delay is uncharacteristic. In my view, the delay is attributable to both the defendants and the plaintiff, neither of whom complied with the Court’s direction as to the filing of written submissions. Whilst I acknowledge that there is no duty on a defendant to stimulate a dilatory plaintiff into action,[13] there is a duty on a party to litigation to comply with directions. Furthermore, the issue in this matter does not involve a contest that requires determination, other than for a determination as to the appropriate costs order that should be made against the plaintiff.  Finally, whilst the delay is significant, and unacceptable, I have no doubt that the death of the defendants’ solicitor played a significant role in the length of the delay.  It also appears to me that the delay is largely due to dilatoriness of the legal representatives rather than the defendants themselves. Finally, and importantly I note that the effect of the delay is that the plaintiff has had access to funds for a considerable period of time that he would not otherwise have been entitled to if an order for costs had been made at the appropriate time.
  1. [38]
    The plaintiff has submitted that by reason of the defendants’ failure to seek costs in a timely way, he has regulated his affairs accordingly, on the assumption that the defendants have abandoned their rights to costs, and that any order for costs now would unfairly prejudice him. He has not adduced any evidence however in support of that rather bland assertion and I am accordingly not disposed to place any weight upon it.
  1. [39]
    For these reasons, I am satisfied that the justice of the situation requires an order for costs to be made. A successful party in litigation is entitled to an award of costs in its favour, and for the reasons outlined above, I am not persuaded that I should depart from that general rule in this matter.

Costs

  1. [40]
    The defendants seek an order for costs on the indemnity basis in the amount of $114,478.80 and they rely upon the affidavit evidence of Mr C Pike, Costs Assessor in support of that submission.
  1. [41]
    Rule 703 of the UCPR empowers a court to order costs on the indemnity basis and sub-rule (3) provides that when assessing costs on that basis, a cost assessor must allow all costs reasonably incurred and of a reasonable amount.
  1. [42]
    The plaintiff resists such an order on the basis that none of the affidavits filed provide any particulars of the work performed which would permit a third party with the relevant knowledge to determine if the costs were “reasonably incurred and of a reasonable amount”. I agree. The information before the court is inadequate to allow an order for a set amount. The accounts provided to the court are, in the case of the solicitor, in the form of one and a half pages with little particularity and with amounts bulked.[14] The accounts of counsel are contained in his memorandum of fees.[15]  A cursory glance at these documents reveals that assessment of a costs order is appropriate and necessary in this matter, as the information provided is such that the court cannot make any assessment as to whether the costs were reasonably incurred and of a reasonable amount.  No reliance can be placed upon the costs assessor’s opinion in that regard given the cursory nature of the information that was provided to him.

Calderbank offer of settlement

  1. [43]
    The defendants made an offer of settlement pursuant to Chapter 9, Part 5 of UCPR on 13 January 2009.[16]  That offer was identical to the judgment delivered.  An identical offer had been made by the defendants on 28 November 2007 which was before the action commenced on 7 March 2008.
  1. [44]
    The defendants submit that the plaintiff unreasonably rejected that offer.
  1. [45]
    Of particular relevance to this issue is the fact that the plaintiff’s claims failed at the very first hurdle as they were brought outside the limitation period and were statute barred.[17]
  1. [46]
    Understandably, counsel for the plaintiff did not submit that an order for costs to be assessed on the indemnity basis would be inappropriate. Given the surrounding facts in this matter, and the provisions of r 360 (which has application due to the applicant’s counterclaim), that is quite understandable.
  1. [47]
    I am not satisfied that another order for costs is appropriate in the circumstances.
  1. [48]
    The plaintiff has submitted however, that costs should fall according to the outcome of particular issues in the proceedings,[18] and as the applicant’s failed in relation to two aspects of their counterclaim then they would and should only be entitled to one half of their costs.
  1. [49]
    I note however the comment I made on 15 December 2011 after delivering judgment when discussing the issue of costs:

I can indicate that my view is that the vast majority of this trial was concerned with the plaintiff’s claim and I would think, in the ordinary course of events, given the way the matter was litigated and the evidentiary issues that the order and the evidentiary issues, that the order would probably be that the plaintiff should pay the defendants’ costs of and incidental to the action to be assessed.  So that’s my way of thinking at the moment if that’s of any assistance to the nature of the submissions that you’d like to put in.

  1. [50]
    It should be noted that I was of course speaking of an assessment on the standard basis at the time.
  1. [51]
    Given that I am proposing to order costs to be assessed on the indemnity basis, I have reflected upon that comment and I have concluded that it would be appropriate to make some allowance for the applicant’s unsuccessful counterclaims, although not to the extent of a 50% reduction. In my view, after reconsidering the way the trial was conducted, a 25% reduction would be appropriate in all of the circumstances.

Orders

  1. The plaintiff is ordered to pay 75% of the defendants’ costs of and incidental to the claim to be assessed on the indemnity basis for the period up to and including 15 December 2011.
  2. I will hear the parties as to costs regarding these applications.

Footnotes

[1]  [2005] QCA 242.

[2]  [2003] QDC 420.

[3]  (1992) 1 Qd R 592 at 594 (Ryan and Dowsett JJ agreed at 595).

[4]  Rules 680 and 681 UCPR. 

[5]Donald Campbell and Co Ltd v Pollak [1927] AC 732 at 811 and 812; [1927] All ER 1 per Viscount Cove LC.

[6]  [2000] QCA 178 at [2].

[7]  Affidavit of Trevor Hauff filed 15 August 2014, para 17.

[8]  Affidavit of Trevor Hauff filed 15 August 2014, para 10.

[9]  Affidavit of Bruce Hutcheon filed 18 August 2014.

[10]  Affidavit of Trevor Hauff filed 15 August 2014, Exhibit TGH3.

[11]  Affidavit of Trevor Hauff filed 15 August 2014.

[12]  Affidavit of Trevor Hauff filed 15 August 2014.

[13]Allen v Sir Alfred McAlpine & Sons Limited [1968] 2 Q.D. 229 [C.A.]; Zimmer Orthopaedic Limited v Zimmer Manufacturing Co [1968] 2 All ER 309 [Cross J] at p [311]; Duncan v Lowenthal [1969] V.R. 180 [F.C.]; Queensland Trustees Limited v Drysdale Hendy & Co. [1992] 2 Qd R 625 at pp [630-631].

[14]  Affidavit of Mr C Pike, Exhibit CP1.

[15]  Affidavit of Mr Pike, Exhibit CP1.

[16]  Affidavit of Trevor Hauff, sworn 15 August 2014, Exhibit TGH 5.

[17]Schofield v Schofield & Anor [2011] QDC 306 at para [51].

[18]Thiess v T.C.N. Channel 9 Pty Limited (1994) 1 Qd R 156 [F.C].

Close

Editorial Notes

  • Published Case Name:

    Scholfield v Scholfield & Anor (No. 2)

  • Shortened Case Name:

    Scholfield v Scholfield & Anor (No. 2)

  • MNC:

    [2014] QDC 243

  • Court:

    QDC

  • Judge(s):

    Farr DCJ

  • Date:

    31 Oct 2014

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
Allen v Sir Alfred McAlpine & Sons Limited [1968] 2 Q.D. 229
1 citation
Citicorp Australia Limited v Metropolitan Public Abattoir Board[1992] 1 Qd R 592; [1991] QSCFC 59
1 citation
Concord Park Pty Ltd v Allied Organik Ltd [2003] QDC 420
1 citation
Donald Campbell & Co. v Pollak (1927) AC 732
1 citation
Donald Campbell and Co Ltd v Pollak [1927] All ER 1
1 citation
Duncan v Lowenthal (1969) VR 180
1 citation
Fraser Property Developments Pty Ltd v Sommerfeld[2005] 2 Qd R 404; [2005] QCA 242
1 citation
Kaats v Caelers [1966] Qd R 482
1 citation
Mundy v Butterly Co. (1932) 102 L J Ch 23
1 citation
Queensland Trustees Ltd v Drysdale Hendy & Co (a firm) [1992] 2 Qd R 625
1 citation
Scholfield v Scholfield [2011] QDC 306
1 citation
Spencer v Watts (1889) 23 QBD 350
1 citation
Thiess v TCN Channel Nine Pty Ltd (No 5) [1994] 1 Qd R 156
1 citation
Tyler v Custom Credit Corp Ltd [2000] QCA 178
1 citation
Zimmer Orthopaedic Limited v Zimmer Manufacturing Co [1968] 2 All ER 309
1 citation

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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