Hunter Helicopter Charters Pty Ltd v ACN 133 019 093 Pty Ltd (No 2)
[2017] QDC 172
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- Unreported Judgment
- Hunter Helicopter Charters Pty Ltd v ACN 133 019 093 Pty Ltd (No 2)[2017] QDC 172
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Hunter Helicopter Charters Pty Ltd v ACN 133 019 093 Pty Ltd (No 2)[2017] QDC 172
Hunter Helicopter Charters Pty Ltd v ACN 133 019 093 Pty Ltd (No 2)[2017] QDC 172
DISTRICT COURT OF QUEENSLAND
CITATION: | Hunter Helicopter Charters Pty Ltd v ACN 133 019 093 Pty Ltd & Ors (No 2) [2017] QDC 172 |
PARTIES: | HUNTER HELICOPTER CHARTERS PTY LTD ACN 111 245 731 (applicant) v ACN 133 019 093 PTY LTD (first respondent) DUKE BOWAN (MA) PTY LTD OCN 168 846 17 (second respondent) RICHARD JOHN MARLBOROUGH (third respondent) COLIN WILLIAM MACVICAR (fourth respondent) |
FILE NO/S: | 209/2016 |
DIVISION: | Civil |
PROCEEDING: | Application on the papers |
ORIGINATING COURT: | District Court at Southport |
DELIVERED ON: | 23 June 2017 |
DELIVERED AT: | Southport |
HEARING DATE: | On the papers |
JUDGE: | Kent QC DCJ |
ORDER: | Respondents to pay the applicant’s costs of the proceeding and the application on an indemnity basis. |
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – where the applicant was successful on a previous summary judgment application – where the applicant now seeks their costs on an indemnity basis – where there is a contract between the parties that plainly and unambiguously provides for indemnity costs in these circumstances – where an offer of settlement was sent by the respondents’ solicitors – where the offer slightly exceeded the judgment amount – where the offer was only open for approximately twenty four hours and was thus not a formal offer pursuant to rule 355 of the Uniform Civil Procedure Rules 1999 (Qld) – where the offer was beset with contingencies, including the agreement and performance of obligations by third parties unconnected to the proceedings – where the offer could not be considered a meaningful attempt to compromise proceedings – whether the Court should exercise its discretion to award the applicant its costs on the indemnity basis Uniform Civil Procedure Rules 1999 (Qld), r 355 Balnaves v Smith [2012] QSC 408, considered Lee v Australia & New Zealand Banking Group [2013] QCA 284, considered Platinum United II Pty Ltd v Secured Mortgage Management Ltd (in liq) [2011] QCA 229, considered |
COUNSEL: | M Lazinski for the applicant C Johnstone for the respondents |
SOLICITORS: | MacGregor O'Reilly Solicitors for the applicant Ramsden Lawyers for the respondents |
- [1]In this matter, I gave summary judgment for the applicant plaintiff on 20 March 2017. I indicated that I would receive submissions as to costs. I also indicated, as pointed out by counsel for the respondents, that the party’s submissions on costs should not exceed three pages. In any event, submissions were made on behalf of the applicant that ran to six pages and attached a number of authorities. The respondents provided a short outline of less than two pages and made the point that the submissions were not to exceed three pages, submitting that I should only consider the first three pages of the applicant’s submissions. There is merit in this submission, however the respondents have also attached a letter upon which they rely on the issue of costs. That, in itself, runs to four pages. In the result, I will consider all of these submissions.
- [2]The successful applicant seeks costs on an indemnity basis. Costs would ordinarily follow the result. The reason for the indemnity basis is said to be clause 11 of the loan offer contract, which provides for an award on this basis should the credit provider (the applicant in this proceeding) be required to take enforceable recovery action, which is what has occurred in this case.
- [3]The applicant refers to Lee v Australia & New Zealand Banking Group,[1] where Philip McMurdo J said at [9]:
‘…the existence of this contractual entitlement does not require an order for the payment of its costs and upon the indemnity basis. In such cases, it remains a discretionary judgment for the court, although the discretion should ordinarily be exercised in a way which corresponds with the mortgagee’s contractual entitlement. (See eg, Kyabram Property Investments Pty Ltd v Murray [2005] NSWCA 87 at [14] per Beazley JA (as she then was), in which the relevant principles as stated by the Court of Appeal in England in Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] Ch 171, were set out). The question then is whether the discretion should be exercised other than according to the respondent’s contractual right.’
- [4]The applicant also referred to Platinum United II Pty Ltd v Secured Mortgage Management Ltd (in liq)[2] per Fraser JA at [6]:
‘The general principle is that a mortgagee is ordinarily limited to party and party costs (or “the standard basis of assessment” in r 702 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”)) but a court will usually exercise the discretion as to costs to give effect to a contractual provision which “plainly and unambiguously” provides for taxation on another basis. (Re Adelphi Hotel (Brighton) Ltd [1953] 2 All ER 498 at 502 per Vaisey J. The principle has been applied in numerous decisions in Australia, including Jamieson v Gosigil Pty Ltd [1983] 2 Qd R 117 at 120–123 per GN Williams J).’
- [5]That is, so it is submitted, there is a contractual provision in this case that plainly and unambiguously provides for indemnity costs in these circumstances and the line of authority referred to sets out the principle that a court, although not bound thereby, will normally exercise the direction as to costs in that way. There seems to be no contest that clause 11 of the loan offer contract is such a provision and is binding. The applicant also points to some other features of the application, and the dispute between the parties is said to also justify an award for indemnity costs.
- [6]In response, the respondents accept that generally costs follow the event. No submissions are made as to the clause in the loan agreement or the principles referred to. However, the respondents rely on an offer of settlement to submit that the applicant ought to pay the respondents’ costs; alternatively, there be no order as to costs; alternatively, that costs should be assessed on the standard basis.
- [7]The offer was dated 14 December 2016. It is submitted that the terms of the offer included a settlement amount that exceeded the judgment amount, so that had it been accepted the applicant would have been in a better position than it achieved in the proceeding.
- [8]The offer is contained in a letter to the applicant’s solicitor from the solicitor for the respondents. It refers to the applicant as ‘Reef Pontoons’. This is a reference to the applicant’s predecessor, which assigned the interest in the relevant loan agreement to the applicant in March 2016.[3] The letter continues with a narrative as to the relationship between Reef Pontoons and it arguably having a breach of contract claim against MM Prime Investments Pty Ltd (the previous name of the first respondent in this application).
- [9]The letter continues its narrative by suggesting that the respondents be permitted to continue their apparent enterprise of selling property (five lots) on behalf of the applicant. The settlement offer includes the propositions that:
- (a)The respondents arrange this sale process, apparently on behalf of the applicant (or perhaps Reef Pontoons – it is not clear);
- (b)upon settlement:
- (i)Reef Pontoons pays the applicant the amount owing, $199,875.61 from sale proceeds;
- (ii)thereupon the applicant releases its mortgage over the sale lots;
- (iii)the respondents’ agents be paid a certain amount of money from the proceeds;
- (iv)Reef Pontoons retains the balance of the sale proceeds;
- (c)the applicant agrees to consent orders that this proceeding and another allied proceeding in the Supreme Court be stayed with no order as to costs;
- (d)if the respondents fail to discharge their obligations under this arrangement, they will consent to the applicant entering judgment against them in the District Court proceeding;
- (e)subject to both Reef Pontoons and the applicant’s discharge of their obligations under these settlement terms, the respondents waive their entitlements to commissions which may be due to them;
- (f)other contracts between the parties, the subject of a Put and Call Option Agreement are to be terminated by consent;
- (g)the District Court proceeding and the Supreme Court proceeding are dismissed with no order as to costs;
- (h)each party is to bear their own costs;
- (i)the parties release each other from existing liabilities out of these arrangements;
- (j)the parties enter into a deed of settlement and release in respect of these terms.
- [10]The letter continues with a narrative as to the possible insolvency of Mr Marlborough and Mr McVicar, in essence, in my view, threatening that in a bankruptcy or liquidation the applicant was at risk of receiving nothing.
- [11]The respondents submit that ‘the terms of the offer included a settlement amount which exceeded the judgment amount.’ In my view, that is a difficult proposition to sustain. The proposed arrangements certainly include an amount payable to the applicant that slightly exceeded the amount of the judgment. However, it was so beset with contingencies, including the agreement and performance of obligations by third parties who are unconnected with this proceeding that it is difficult to see how it amounted to a meaningful attempt to compromise the proceedings. It was not a formal offer within r 355 of the Uniform Civil Procedure Rules 1999 (Qld), in that it was specified only to be open for about 24 hours or so (it is dated 14 December 2016 and was open for acceptance until 4.00pm on 15 December 2016) rather than the specified period of not less than 14 days after the day of service of the offer.
- [12]In Balnaves v Smith,[4] Justice Byrne discussed the effectiveness of offers (under the UCPR) as follows:
‘[20] To be effective for that purpose, the offer must permit fairly ready comparison between the nature and extent of the advantages (and any disadvantages) arising from the judgment with the situation that would have been obtained had the offer been accepted. As the contest will be about costs only, the assessment of the ramifications of the offer should not involve prolonged examination of documents or costly exploration of other information. The UCPR are to be applied with the objective of avoiding undue expense. Determining a contest about costs should not increase them substantially.
[21]So an offer to settle should be clear in its terms. And its effect should be capable of prompt, comparatively inexpensive, assessment – by the recipient, and, where a judicial evaluation needs to be made of the relative benefits and burdens of offer and judgment, by the court.
[22]Difficulty in comparing offer and judgment may well jeopardize the chances of showing that the former was more advantageous to the offeree than the latter. That reality will encourage clarity in the description of the benefits the offeree will derive by acceptance of the offer. For the Part 5 scheme to work, there is no need to interpret rules that prescribe just a handful of formal requirements as impliedly invalidating an offer that incorporates proposals that extend “beyond the claims in the proceeding”.’(footnotes omitted)
- [13]In the result, I do not consider the offer to be of any significant weight in the exercise of the discretion as to costs.
- [14]In all the circumstances, I accept the submissions of the applicant plaintiff on the issue of costs. The respondents will pay the applicant’s costs of the proceeding and the application on an indemnity basis.