Foyle Enterprises Pty Ltd v Steve Parcell Building Services Pty Ltd (No. 2)
[2015] QDC 266
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- Unreported Judgment
- Foyle Enterprises Pty Ltd v Steve Parcell Building Services Pty Ltd (No. 2)[2015] QDC 266
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Foyle Enterprises Pty Ltd v Steve Parcell Building Services Pty Ltd (No. 2)[2015] QDC 266
Foyle Enterprises Pty Ltd v Steve Parcell Building Services Pty Ltd (No. 2)[2015] QDC 266
DISTRICT COURT OF QUEENSLAND
CITATION: | Foyle Enterprises Pty Ltd v Steve Parcell Building Services Pty Ltd (No. 2) [2015] QDC 266 |
PARTIES: | FOYLE ENTERPRISES PTY LTD (plaintiff) v STEVE PARCELL BUILDING SERVICES PTY LTD (defendant) |
FILE NO/S: | Ipswich D79/2013 |
DIVISION: | Civil |
PROCEEDING: | Judgment on costs |
ORIGINATING COURT: | District Court at Ipswich |
DELIVERED ON: | 30 October 2015 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 27, 28, 29 April 2015 |
JUDGE: | Sheridan DCJ |
ORDER: |
|
CATCHWORDS: | PROCEDURE – COSTS – DEPARTING FROM THE GENERAL RULE – whether costs calculated on indemnity basis PROCEDURE – COSTS – JURISDICTION – PERSONS NOT PARTIES TO PROCEEDINGS – defendant successful at trial – whether non-party director of plaintiff company should pay the costs ordered against the plaintiff |
COUNSEL: | S Malcomson for the plaintiff JSD Payne for the defendant |
SOLICITORS: | Eaton Lawyers for the plaintiff Archibald & Brown Lawyers for the defendant |
- [2]In this case, the plaintiff’s claim was dismissed. The defendant was successful on all issues argued at trial except its defence that the plaintiff’s claim was precluded entirely by s 42 of the Queensland Building Services Authority Act 1991 (Qld).
- [3]In the circumstances, the plaintiff has conceded that costs should be ordered in favour of the defendant and says that those costs should be on a standard basis. The defendant seeks an order that part of the costs be calculated on the indemnity basis in accordance with r 703(1) of the Uniform Civil Procedure Rules 1999 (“UCPR”).
- [4]The court’s discretion in the award of costs is said to be “absolute and unfettered”, though it must of course be exercised judicially.[1]
- [5]It has also been said that solicitor and client costs (now referred to as indemnity costs) can appropriately be awarded in cases where there is “some special or unusual feature in the case to justify the court exercising its discretion”.[2] Sheppard J in Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248, after analysing the various past authorities, said that; “The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.”[3]
- [6]Counsel for the defendant relied on the statement of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 where it was said ;
“I believe that it is appropriate to consider awarding ‘solicitor and client’ or ‘indemnity’ costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success.”[4]
In reliance on that passage and other authorities, counsel for the defendant submitted that the position taken by the plaintiff in relation to the 23 claims which it was determined were statute-barred was always unarguable and ought never have been pleaded. Counsel for the defendant submitted that the result was that the quantum of the plaintiff’s claim at trial was exaggerated, the court’s time was wasted with evidence about the 23 contracts and the defendant was forced to spend time and money defending claims that could never succeed.
- [7]In the nature of this case, particularly having regard to the manner in which the evidence was led, I am not persuaded that the court’s time was wasted in hearing evidence about those 23 contracts. Evidence was led about all contracts so as to put before the court evidence of the entire contractual relationship between the parties.
- [8]Accordingly, I am not satisfied that the particular facts and circumstances of this case warrant the making of an order for the payment of any costs on an indemnity basis.
- [9]The defendant also sought an order that MrFriel of the plaintiff pay the costs of the whole of the proceedings, or at least the 23 claims, personally. It is submitted by counsel for the defendant that the plaintiff is a $1 company through which Mr Friel operated as an independent contractor. It is said that Mr Friel was the only person giving instructions and evidence for the plaintiff at the trial and that it was he who stood to benefit if the plaintiff was successful. I accept those submissions are consistent with the evidence given in the proceeding.
- [10]In counsel’s submissions, reference was made to the Queensland Supreme Court decision in Babsari Pty Ltd v Wong & Ors.[5] In that case, Justice White (as she then was) was considering an application to vary a costs order which had been made by the trial judge. On the facts, Babsari Pty Ltd (‘Babsari’) was unable to meet its costs obligations and one of the directors of Babsari consequently attempted to deregister the company. Justice White commented that it might be inferred that step was taken to avoid the usual liquidation procedures.
- [11]The Court there accepted there was clear jurisdiction to make a costs order against non‑parties to legal proceedings and concluded that the facts of that case justified the making of an order for costs against a non-party. However, in doing so, her Honour stated:
“This is not to advocate making a director liable for costs where a company has unsuccessfully bought or defended proceedings funded by the director. To do so without more would erode the concept of the separate liability of the company. Knight makes clear that the prima facie rule is that an order for costs is only made against a party to the litigation. Something more must be present before a director will be made liable for costs if the company is unsuccessful.”[6]
- [12]
- [13]In Babsari, her Honour went on to consider the effect of an application for security for costs. Such an application was made here and security in an amount of $38,100 was paid into court. That amount was the amount requested in the defendant’s application.
- [14]I accept, based on the amount of security currently in court, that there will be a costs’ shortfall and it is that shortfall to which any application against Mr Friel personally is being made.
- [15]In terms of the effect that the availability of an order for security of costs has on the order now sought by the defendant, some relevant observations were made in the decision of the High Court in Knight & Anor v F P Special Assets Limited & Ors.[9] In that case, Mason CJ and Deane J in a joint judgment said: “.. the availability of the remedy is scarcely a reason for denying the existence of jurisdiction to make an order for costs against the ‘real party’ at the end of the trial of an action.”[10] Though their Honours did note that;
“The availability of an order for security for costs at an earlier stage of the litigation would, in many situations, be a strong argument for refusing to exercise a discretion to order costs against a non-party, but discretion must be distinguished from jurisdiction.”[11]
- [16]In that case, earlier in their judgment their Honours had said:
“The amount awarded as security is no more than an estimate of the future costs and it is not reasonable to expect a defendant to make further applications to the court at every stage when it appears that costs are escalating so as to render the amount of security previously awarded insufficient.”[12]
- [17]By reference to the affidavit of Leslie Edward Moore, solicitor for the defendant, dated 25 September 2015, it is the inadequacy of the amount of security which has resulted in a shortfall in the amount of money in court and available to be used in satisfaction of any assessment of costs. Based on the costs actually incurred in running this litigation to conclusion, as appears from statements made in the affidavit of Mr Moore, there will inevitably be a significant shortfall.
- [18]Based on the comments in the case of Knight,[13] I do not consider the fact that a security for costs order was available and was in fact obtained is a sufficient basis to now deprive the defendant of an entitlement to request the court make an order against Mr Friel personally.
- [19]However, I do not consider that there is a sufficient reason on the material currently before the Court for an order to be made against Mr Friel personally. Unlike Babsari, there is presently no evidence that the defendant will not meet its costs obligations and there is no evidence that Mr Friel has taken any steps which would support an inference that he intends to avoid the usual liquidation procedures. On the facts here, without expressing a view as to whether exceptional circumstances will be established, the request is premature.
- [20]The final order sought is that the costs in the sum of $38,100 which have been paid into court by way of security be paid out of court to the trust account of Archibald & Brown Lawyers, the solicitors for the defendant. Having regard to the affidavit of Mr Moore, the defendant’s costs on a standard basis of the action will exceed the $38,100 currently held in court by way of security and accordingly it is appropriate that I make that order.
- [21]Order
- The plaintiff pay the defendant’s costs of and incidental to the proceedings to be assessed on a standard basis.
- The amount of $38,100 which was paid into court by the plaintiff in May 2014 pursuant to the terms of the Consent Order dated 28 November 2013 be paid to the trust account of Archibald & Brown Lawyers, the solicitors for the defendant.
Footnotes
[1]Fisher J in Trade Practices Commission v Nicholas Enterprises Pty Ltd and Others (1979) 28 ALR 201 at p 207 quoting Bray CJ in Cretazzo v Lombardi (1975) 13 SASR 4 at p 11
[2]Preston v Preston [1982] 1 All ER 41 at p 58
[3]Colgate Palmolive Co and Another v Cussons Pty Ltd at p 257
[4]At p 401
[5][2000] QSC 380
[6]Babsari Pty Ltd v Wong & Ors [2000] QSC 380 at [23].
[7][1997] 1 WLR 1613
[8]Ibid p 1618
[9](1992) 107 ALR 585
[10]Ibid at p 594
[11]Ibid
[12]Ibid at pp 593-594
[13](1992) 107 ALR 585