Wash Investments Pty Ltd v SCK Properties Pty Ltd
[2016] QDC 269
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Wash Investments Pty Ltd v SCK Properties Pty Ltd[2016] QDC 269
Wash Investments Pty Ltd v SCK Properties Pty Ltd[2016] QDC 269
[2016] QDC 269
DISTRICT COURT OF QUEENSLAND
CIVIL JURISDICTION
JUDGE RYRIE
No 2920 of 2013
WASH INVESTMENTS PTY LTD and OTHERSPlaintiffs
and
SCK PROPERTIES PTY LTD and OTHERSDefendants
BRISBANE
10.53 AM, FRIDAY, 28 OCTOBER 2016
DECISION DELIVERED (NO APPEARANCE WAS REQUIRED)
HER HONOUR: Judgment originally in respect of the matter between the parties was given in published form by me on the 8th of April 2016. It was subsequently appealed and went to the Court of Appeal for review. On the 14th of October 2016 the Court of Appeal dismissed the appeal bar with an adjustment in respect of a monetary order only as it related to the amount in respect of the lease component of rent and outgoings outstanding.
The proceedings, which the Court of Appeal reviewed, related to a proceedings that encompassed lease dispute where damages were being sought by the plaintiff for wrongful termination of a lease and subsequent eviction. There was a counter-claim by the defendants who sought damages for outstanding rent and outgoings, and as part of and included in that proceedings there was certain claims of defamation made against various parties.
At the end of my reasons for decision in my judgment 8th of April 2016, I asked the parties to provide any submissions on costs subject to, of course, 28 days passing. Submissions were actually received from the defendant, exhibit 1, dated 6th of May 2016, which was ultimately received by email 9th of May 2016. Accompanied with those written submissions from the defendant included an affidavit of Anthony Knox, solicitor, sworn 9th of May 2016 with annexures.
Those documents, both the written submissions on costs from the defendant coupled with the affidavit from Mr Knox received for the purpose of those submissions will be marked collectively exhibit 1 for the purpose of this decision.
EXHIBIT #1 ADMITTED AND MARKED
HER HONOUR: As a consequence of the matter being appealed to the Court of Appeal, costs were not determined by me until the outcome of that appeal by the higher Court. An invitation was sent subsequently to the plaintiffs to ask, once the Court of Appeal had disposed with the matter, whether or not it wished to be heard in relation to any costs relating to my original judgment as none have been received.
On the 24th of October 2016 it was received by email what was the plaintiffs written submissions in respect of costs. Coupled with it was the application for special leave to appeal to the High Court. Those documents will be collectively marked, for the purpose of this decision as exhibit number 2.
EXHIBIT #2 ADMITTED AND MARKED
HER HONOUR: There had been, in the interim, an email that had been received on the 17th of October 2016 from the plaintiff’s solicitors, which I’ll mark as exhibit number 3.
EXHIBIT #3 ADMITTED AND MARKED
HER HONOUR: That letter asked whether or not I would delay any argument or decision on the question of costs. In other words wait the outcome of the application for special leave to the High Court. An email in reply was sent at my instruction by my Associate on the same day, 17th of October 2016, indicating the reasons why I did not wish to delay the matter further. That email will be marked 4 for the purpose, again, of this decision.
EXHIBIT #4 ADMITTED AND MARKED
HER HONOUR: The defendant seeks indemnity costs by reference to the well known authority of Colgate Palmolive Company and another v Cussons Pty Ltd (1993) 46 FCR 225 at 233-234. The defendant’s written submissions as contained in exhibit 1 set out the various grounds relied upon having regard to that authority, I have had careful regard to those and I am inclined to agree with the submission made by the plaintiff that there appears to be, from my point of view, two main grounds rather than one that the plaintiff asserted, that may well justify, if I was so minded, at least a consideration as to whether or not indemnity costs ought to be made or should be made, rather than the usual costs order that would follow, namely costs should follow the event.
I will speak about shortly section 40 of the Defamation Act which I will subsequently deal with as part of these reasons. Returning, then, to the principles relied upon under Colgate Palmolive that the defendant has referred to, the two grounds that I see are relevant are (1) the wilful disregard of known facts or clearly established law, and the second ground is (2) the imprudent refusal of an offer to compromise. Those two grounds are significant grounds of which it can justify, if the Court is so satisfied, to make an indemnity costs order (paragraph 35 of De Carlo against Dubois (2002) QCA 225, where the Court has helpfully set out the relevant principles by reference to the earlier authority of Colgate Palmolive).
Turing, then, to the submissions that have been made in respect of these points by the defendant at paragraph 2 of exhibit 1. The defendant says insofar as the proceeding being commenced in wilful disregard of known facts or clearly established law, namely ground 1, that:
It was clear on the documentary evidence that the plaintiffs were aware or should have been aware that they;
- (a)were in persistent breach of the lease over a lengthy period of time and failing to pay rent and outgoings, and;
- (b)had, in fact, repudiated the lease via their solicitors’ correspondence dated 19th of June 2013.
Paragraph 13 of those submissions says:
It’s settled law that a party is not in a position to claim damages if it’s in fundamental breach of contract and not in a position to remedy it.
Having regard to what the Court of Appeal said at paragraphs 28, 29, 30, and particularly at 31 of its decision, I consider that those paragraphs are relevant for the purpose of determining this question. Is this ground, in fact, made out to justify an indemnity order being made as the defendant asserts. While I accept what the defendant says at paragraphs 22 and 23 as it relates to the lease component of the proceedings, was that part of the proceedings commenced in wilful disregard. The question therefore to be posed here for me is was it in “wilful disregard”?
I’ve already observed the reasons by the Court of Appeal, and its reasoning at paragraph 31 certainly confirms that the ultimate outcome of the lease claim and the subsequent counter-claim in respect of that component of the proceedings in favour of the defendant, which was reconciled at first instance was also supported by considerable authority. It was also noted that that point had also been raised, namely whether or not there had been repudiation, or, as the Court of Appeal referred to it, a renunciation on the part of the plaintiffs when they directed their solicitor to send the correspondence dated 19th of June 2013 to the defendant.
It was noted by the Court of Appeal in the paragraphs I’ve already referred to in their decision that the point on that particular issue had been raised as a live issue between the parties who were both present at the hearing on day 3, and it was observed by the Court of Appeal that no other evidence could have, in any event, been adduced had the point been pleaded by amendment what the plaintiffs believed to have been the effect of their conduct in so directing their solicitors to send that letter on their behalf. Accordingly, the Court of Appeal rejected the assertion that the plaintiffs had been somewhat unfairly prejudiced in their conduct of the trial due to the fact of a lack of pleading and/or a lack of any amended pleading to reflect what the defendant says was a basis upon which it was entitled to bring the contract to an end and reclaim its premises from the plaintiff who was conducting a business there under the lease that had been entered into between them.
Accordingly, while I accept that there may well have been a failure or a disregard to some of the known facts or clearly established law, it may well not have necessarily been wilful. As indicated already by me, that is a relevant consideration for the purpose of any order being made on this basis under the indemnity rule to which I’ve already referred as set out helpfully in Dubois at paragraph 37. There was, however, in any event, a further ground relied on by the defendants to support what they say is the basis upon which there should be an indemnity costs order made, that is the ground imprudent refusal of an offer to compromise.
In this regard, the defendant at paragraphs 29 to 36, in its written submission to me, says that on the 23rd of January 2015 the defendant had made an offer to settle the proceedings on the basis that the plaintiffs release in favour of the defendants as security for costs held with the Court of $20,000 in full and final satisfaction of the defendants’ costs of the claim and counter-claim and the defendants to discontinue the counter-claim with no order as to costs. That offer was rejected by the plaintiffs and the offer was significantly more favourable to the plaintiffs than the judgment that was actually received. The offer to settle was a settlement offer. It was submitted for the purpose of not only section 40, subparagraph 3 of the Defamation Act Queensland as it related to the defamation claims of the proceedings, but it was also an offer to settle, while expressed in accordance with the Uniform Civil Procedure Rules, that can also be treated by the Court as a “Calderbank” offer in respect of the lease and the defamation components which were the subject of the proceedings, 2920 of ’13.
As stated by the defendant at paragraph 34 in its written submissions, it was recognised by his Honour Justice Chesterman in Emanuel that the failure by a party to accept an offer to compromise a proceedings in terms more favourable to it than the eventual outcome is an important factor, and in the absence of any other countervailing factors will be likely to lead to an order for indemnity cost. The plaintiff submits that the rejection of the offer by the plaintiff was unreasonable, and it sets out, at paragraph 35 in its submissions, why.
In regards to the Defamation Act of section 40, the defendant submitted there were no factors, in the interests of justice, that would also countervail the ordering of indemnity costs under that section, as the defendant’s costs should be paid on an indemnity basis and must be paid under that section because they successfully defended the plaintiff’s defamation claims. Secondly, there is no factors to justify the interests of justice would countervail such an award.
The plaintiff, in its submissions, on the other hand, at paragraph 4(e) of those submissions, indicated that the offer had no force, in effect, because the offer was not expressed to have been made in reliance on section 40 of the Defamation Act, and the defamation claims were only a minor component of the proceedings, in any event, which was predominantly related to the leasing dispute between the parties. It was submitted it would therefore be inappropriate to award costs of the proceedings on the indemnity basis where the action was not wholly or even primarily a defamation proceedings. It was submitted that there was no proper or just reason for ordering the defendant’s costs to be paid on an indemnity basis.
Those submissions made on this point, in my mind, overlook the following. Claim 2920 of ’13 encompassed both the leasing issue and the defamation issues in the same pleading. The offer to settle referred specifically to that proceeding as a whole, therefore it was not necessary to be expressed as having only reliance made in respect of section 40 of the Defamation Act. The defamation component of the proceedings, in my mind, also occupied a large part of the trial evidence, in any event. It commenced at day 3 and, in fact, finished at day 7. The trial went for eight days; however, day 8 was occupied solely by submissions being made. Day 1 was occupied with some evidence, but was adjourned very quickly for other reasons.
It is also a good time, now, to talk about section 40 of the Defamation Act itself. The Act provides that the Court must, unless the interests of justice requires otherwise, that:
If defamation proceedings are unsuccessfully brought by a plaintiff and costs in the proceedings are to be awarded to the defendant, that costs of and incidental to the proceedings are to be assessed on an indemnity basis if the Court is satisfied that the plaintiff unreasonably failed to accept a settlement offer made by the defendant.
I consider that the plaintiffs did unreasonably fail to accept the settlement offer that was made by the defendant. It was reasonable and it would have completed all of the claims in the proceedings. That included the claim relating to the lease being brought for damages on the part of the plaintiff, the counterclaim and, indeed, all other components by reference to the proceeding itself.
I should also mention that I consider the offer to settle, while expressed as being made under the Uniform Civil Procedure Rules, can nevertheless, in my mind, still be taken as a Calderbank offer. As Justice Chesterman in Emanuel, applied in Sultana, said:
A failure to compromise a proceedings in term more favourable to it than the eventual outcome is an important factor, and in the absence of any countervailing factors, will be likely to lead to an order for indemnity costs.
I agree with the observation and the guidance provided by his Honour Justice Chesterman, as he then was, and have taken it into account.
I do not see that there are any countervailing factors that would allow me, in the circumstances, to make another order as proposed by the plaintiffs. I am prepared to accept, however, the plaintiff’s submission that costs, if any are ordered on an indemnity basis, ought to be limited from the making of the offer to settle. I am prepared to accede to that request, and note that it was an alternative order, in any event, being sought by the defendant at paragraph 38(b) in its written submissions. In respect to the latter, however, it has to be said that the defendant was, in fact, seeking to have its indemnity costs paid throughout the whole of the period, from the proceeding’s commencement.
I also find, as a matter of completeness, that there are no factors in the interests of justice which would countervail against the awarding of indemnity costs pursuant to what is provided under the Defamation Act, section 40(2). I find, therefore, that a proper basis is made out, having regard to the various categories, as I’ve already outlined, set out in Di Carlo and Dubois, paragraph 37, in respect of this ground, namely, so that it’s clear, that there has been an imprudent refusal of an offer to compromise by the plaintiffs. I consider that this was the case here.
In the event that I ordered costs on an indemnity basis, a stay of enforcement is sought by the plaintiff, in any event. It is sought that it not be enforced, pending the outcome of the application for special leave to the High Court to appeal in respect of the leasing matter component of the proceedings. I shall deal with this, as a matter of completeness. The grounds for such a stay are helpfully expressed recently by the Court of Appeal in the decision of Menso against Commonwealth Bank of Australia [2016] QCA 188.
At paragraph 7, which, as the Court observed:
…the test reflects the wide discretion that’s reposed in the Court.
The Court of Appeal:
However, the traditional factors to be taken into account on such an application are: (a) Whether there is a good arguable case; (b) the applicant will be disadvantaged if the stay is not granted; and (c) there is some competing disadvantage to the respondent if the stay is granted, which outweighs the disadvantage suffered by the applicant.
Dealing with each in turn, whether there is a good arguable case. In the plaintiff’s submissions on this point, at paragraph 10, it is submitted that the Court of Appeal recognised at paragraph 28 of its decision that the first defendant had not pleaded that it was entitled to terminate the lease from the plaintiff’s repudiation (renunciation). Reference was had to the High Court decision of Banque Commerciale SA (in liq) against Akhil Holdings Proprietary Limited.
The plaintiff’s proposition is that judgment on the leasing issue should not have been founded on the basis different to that from disclosed by the defendant’s pleadings. It is submitted that there is an arguable ground of appeal to the High Court, and the best measure of whether it has prospects of success is the outcome of the application for special leave to appeal. It is noted decisions on special leave applications are now made on the papers quite swiftly. Those submissions, in my mind, overlook the following.
While it is true what is pointed out as being stated at paragraph 28 by the Court of Appeal is correct, it cannot, however, be read in isolation from the subsequent paragraphs that follow, paragraphs 29, 30 and 31. I have also had brief regard to the decision of Banque and the reliance upon it, and without going into and determining or even expressing an opinion as to what outcome the application for special leave to the High Court may or may not be, I note that the comments made in Banque by the various esteemed judges on the High Court were in that case, in the context of the bank, itself, as a defendant, not having been present as a party at the hearing. And it was noted by the Court that, in those circumstances, that that was a significant factor, because, as it was noted at page 287, if the party is present at a hearing, then an inference that can be drawn by acquiescence by a party in the course adopted by another during the course of the trial, which their presence would be sufficient grounds to ground an inference being drawn, that both parties aware of the issues being litigated. A final observation with regard to Justice Dawson at page 297, is that he also referred to the absence of the party against who it was being claimed. In this case, the Bank was not present for the hearing, and that was a major factor in the Court’s consideration of it.
I also have had regard to the findings and the ultimate decision of the Court of Appeal when reviewing the decision from first instance that there was a unanimous decision from all three members of the Court. As such, in those circumstances, it’s difficult for me, now, to find that there is a good arguable case, the subject of the special leave application to the High Court pending. That ground, in my view, therefore fails.
Just by way of observation, for completeness, to address the question of disadvantage for the purpose of the stay principles. It is submitted by the plaintiff at paragraph 11 in its submissions that if the stay is not granted, it’s likely to be unjustly deprived of their appeal to the High Court. In that paragraph, the plaintiff sets out why. However, as noted by the plaintiff in the previous paragraph, himself, it is noted that applications for special leave are now made on the papers and quite swiftly are disposed. The plaintiff also says, in respect of paragraph 11, that there is no doubt that the defendants will issue a bankruptcy notice if they were to receive a costs order in their favour because of correspondence that the defendant wrote to the plaintiffs on the 18th of October 2016.
Two points can be made about that. I have not been provided with any evidence of the letter referred to, nor am I provided with sufficient evidence to draw an inference or make a finding that there will be an issue of a bankruptcy notice. As such, I can’t rely on any submission made. Further, the plaintiff says in paragraph 11 that any costs order that I make today would have the same unjust result because the enforcement of it, with the added issue that if the appeal to the High Court was successful, would mean that the costs of any assessment at this point would have been wasted.
As I’ve already indicated, the plaintiff has already acknowledged that applicants for special leave to the High Court can be done very quickly and swiftly. On balance, having regard to all the submissions that have been made to me and the material provided for my consideration as part of those submissions, I am not prepared to order any stay of the enforcement of any costs order I make today, pending the outcome of the application for special leave to the High Court. It should also be noted at this point that I had already delayed the ordering of costs on my own volition without any application for a stay being made, pending the Court of Appeal appeal of my decision, in order to provide fairness to the parties and to respect the fact that an allegation in respect of impartiality had been made as part of the notice of appeal to that Court. I do not, however, consider now that it is appropriate to delay any further the making of any costs order.
Accordingly, I make the following order for the reasons I’ve just stated. (1) The plaintiffs pay the defendants’ costs of an incidental to the proceeding, including reserved costs, on an indemnity basis from the 23rd of January 2015 to date, and on a standard basis prior to the 23rd of January 2015. (2) Security held with the Court be immediately discharged to the defendants. That is the completion of the decision. I ask that it be transcribed by those who are listening. Thank you very much. And also that, in due course, upon revision, if required, I shall have it – the transcription of which will be passed onto the respective parties as soon as possible in order that the order can be given effect. Those will be the reasons, and the Court may now be closed.
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