Bendigo and Adelaide Bank Limited v Gaedtke (No. 2)
[2017] QDC 213
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- Unreported Judgment
- Bendigo and Adelaide Bank Limited v Gaedtke (No. 2)[2017] QDC 213
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Bendigo and Adelaide Bank Limited v Gaedtke (No. 2)[2017] QDC 213
Bendigo and Adelaide Bank Limited v Gaedtke (No. 2)[2017] QDC 213
DISTRICT COURT OF QUEENSLAND
CITATION: | Bendigo and Adelaide Bank Limited v Gaedtke (No.2) [2017] QDC 213 |
PARTIES: | BENDIGO AND ADELAIDE BANK LIMITED (ACN 068 049 178) (plaintiff) v DEAN ALAN GAEDTKE (defendant) |
FILE NO/S: | 2484/2016 |
DIVISION: | Civil |
PROCEEDING: | Application for Costs |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 22 August 2017 |
DELIVERED AT: | Brisbane |
HEARING DATE: | On the papers |
JUDGE: | Dorney QC DCJ |
ORDERS: | It is ordered that the defendant pay the plaintiff’s costs of this application for the separate determination of questions prior to trial, to be assessed on the indemnity basis. |
CATCHWORDS: | COSTS – whether indemnity costs to be ordered where contractual clause dealing with costs – whether costs order limited because relevant to application only |
LEGISLATION CITED: | Uniform Civil Procedure Rules 1999, rr 684, 702, 703 |
CASES CITED: | Abigroup Ltd v Sandtara Pty Ltd [2002] NSWCA 45 IBM Australia Ltd v State of Queensland [2016] QSC 70 J & D Rigging Pty Ltd v Agripower Australia Limited & Ors [2014] QCA 23 Mio Art Pty Ltd v Macequest Pty Ltd & Ors (No 2) [2013] QSC 271 Platinum United II Pty Ltd & Anor v Secured Mortgage Management Limited (In Liquidation) [2011] QCA 229 |
COUNSEL: | P D Tucker for the plaintiff A D Gaedtke personally for the defendant |
SOLICITORS: | Results Legal for the plaintiff |
Introduction
- [1]On 28 July 2017 I answered certain questions posed for determination as directed by another Judge of this Court.
- [2]In answering those questions, I ordered that written submissions on costs (if any) of that hearing on those questions, limited to two pages, were to be filed and served by 4.00pm on 1 August 2017. That has been done by both parties.
Plaintiff’s submissions
- [3]The plaintiff, as the beneficiary of the determination of the questions answered, unsurprisingly sought “costs of and incidental to the application”, though on the “indemnity basis”.
- [4]The indemnity basis was based upon Clause 7.1(c) of the Loan Deed which relevantly stated that:
“The (defendant) must pay to the (plaintiff):
…
- (c)all costs and expenses incurred by the (plaintiff) in relation to the enforcement, protection or waiver of any rights under this (Loan Deed) including any bank dishonour fees, legal costs and expenses and any professional or consultant’s fees, on a full indemnity basis.”
- [5]It was argued that the expression “on the indemnity basis” was sufficiently clear to justify the exercise of the discretion considered by the Queensland Court of Appeal in Platinum United II Pty Ltd & Anor v Secured Mortgage Management Limited (In Liquidation) [2011] QCA 229, particularly at [6].
Defendant’s submissions
- [6]Though the defendant limited his Submissions to two pages, he referred both to other documents (contended to be relevant) and to a contemporaneous affidavit filed on 1 August 2017.
- [7]The overall import of these Submissions is discerned to be to the effect that Mr Gaedtke should not be required to pay any, or a minority of, costs. This is implied from:
- reliance upon r 684(2) of the Uniform Civil Procedure Rules 1999 (“UCPR”);
- the assertion that the plaintiff knew that the outcome was a “fait accompli”, because this court was an inferior court to the “Victoria Supreme Court”;
- the notion that although the defendant had “endeavoured copious times to bring this matter to settlement”, there was no relevant response, leading Mr Gaedtke “to believe” that the plaintiff “required this question to be determined” in the plaintiff’s favour “presumably” not only “to bring to finality” Mr Gaedtke’s matter but to “further pending matters” having “nothing to do with the defendant” (contended to be supported by the affidavit referred to);
- since, as a result of this determination having a “material effect on all loans” in Queensland, the party that has “benefited” is the plaintiff and it should, therefore, “be responsible for the majority of the costs”; and
- the “fact” the defendant was “technically insolvent” in 2007 and “even more so now”.
- [8]The affidavit of Mr Gaedtke stated that he had “no option but to defend this proceeding” as he had made “copious settlement offers” to the plaintiff, “all of which have been turned down”. He then listed those particular attempts. In addition, the affidavit incorporated the documents which were attached to his submissions. The remaining paragraphs of the affidavit referred to further matters but took the contentions raised no further. It appeared to be important to the defendant that para 9 of that affidavit stated that, if the plaintiff “had negotiated to settle any time from 2013 to March 2017, we would not be discussing liability as to costs”.
Consideration
- [9]Before turning to the issue of indemnity costs, while I accept that the defendant does “believe” the things he asserted, they are not relevant to the legal determination of this issue in this application.
- [10]R 684(2) is clearly referable to r 684(1). For its part, the latter is directed to a final order of costs to be made in which the court may make an order “in relation to a particular question in, or particular part of, a proceeding”. In context, here the concern that I have is simply with the determination of this application. The determination of costs of the proceeding are yet to be determined.
- [11]The defendant also has not appreciated that an offer to settle, particularly when it is made outside the terms of the UCPR (such as “in accordance with the principles of Calderbank”), is determined not only on the basis whether it was, in a complementary way, unreasonable in the circumstances for the opposing party not to accept the offer but also whether the offer was, stripped to its essentiality, more beneficial than the actual outcome to the party who has so unreasonably rejected the offer: see, for instance, J & D Rigging Pty Ltd v Agripower Australia Limited & Ors [2014] QCA 23, at [5].
- [12]Here, the plaintiff has succeeded entirely on this application. In stark contrast, the defendant has not succeeded at all. Hence, any offers that were rejected could not meet either the test of unreasonableness or the test of the outcome being less beneficial than the import of the offer made.
- [13]Next, it is not to the point that Mr Gaedtke is close to being bankrupt. While that might be a matter between the plaintiff and him on some non-legal level, it cannot be the concern of this Court when deciding this application, in these particular circumstances, according to law.
- [14]As for the issue of indemnity costs, r 702(1) of the UCPR states that, unless these rules or an order of the court provide otherwise, a costs assessor must assess costs on the standard basis. In a complementary way, r 703(1) of the UCPR then states that the court “may” order costs to be assessed “on the indemnity basis”.
- [15]A thorough examination of the circumstances in which the court might order that the assessment of costs be on the indemnity basis where there is a contractual provision covering the matter was undertaken by Martin J in IBM Australia Ltd v State of Queensland [2016] QSC 70. The clause in question provided that:
“If the State makes a claim against and IBM party which is the subject of the State Covenant or State Release, then the State fully indemnifies each IBM party against any liability (including the amount of any judgment, settlement sum and legal and other costs) incurred by the IBM party as a result of that claim.”
As stated by Martin J, the issue between the parties was whether that clause “affords a contractual right to costs assessed on the indemnity basis”: at [4].
- [16]Martin J then considered a number of aspects that bore upon the answer to that issue. In dealing initially with general principles, he noted that “a contractual right to costs does not override the discretionary power of the court with respect to costs”, quoting the relevant passage in Abigroup Ltd v Sandtara Pty Ltd [2002] NSWCA 45, per Stein JA: at [5]. He then went on to note that, while a contractual provision about costs “does not confine a court in the exercise of its discretion, that discretion will usually be exercised consistently with such a provision”: at [6], citing relevant authorities. In considering the construction of a clause “in an obviously commercial document”, after referring to relevant High Court authority, Martin J stated that the matters to be considered are: the language used by the parties; the surrounding circumstances known to them; and the commercial purpose or objects to be secured by the contract. With respect to the language used, he noted that the inclusion of the categories covered by the relevant liability of, amongst other things, legal and other costs (especially in their association with the possibility of judgment or settlement), did not diminish the extent of the coverage but “only makes it clearer”: at [9]. Quite obviously, the surrounding circumstances and the commercial purpose or objects were quite different in that case. Here, they are simply those surrounding the entry into of the relevant loan which was the subject of the Questions answered and its enforcement.
- [17]Turning, finally, to the reference by the various authorities to the requirement that a provision for the payment of costs “be plain and unambiguous” before “it will be construed as requiring the payment of indemnity costs”, Martin J considered several authorities including that in Platinum United II. As he explored there, the principle has been applied to cases which are not concerned with mortgages, including cases involving disputes over commercial loan agreements. The analysis by Martin J showed that, where there is a tie between the indemnity basis and legal costs in the setting of a proceeding, it can be determined that there is a clear comprehension by that indemnity expression of the indemnity basis under r 703(1) of the UCPR: at [12] – [25].
- [18]In his final summation, Martin J, after noting that in ordinary circumstances assessment on the standard basis is the default measure, held that where a sensible commercial construction arrives at a plain and unambiguous meaning that the relevant clause should be construed as entitling a party to indemnity costs, while such a contractual provision does not control the exercise of discretion, a conclusion can be reached that there “is nothing which would suggest that an order for indemnity costs is inappropriate”: at [26]-[27].
- [19]Guided by the relevant principles and noting that the facts of every case can be seen to be, even if slightly, different, I am satisfied that the relevant “legal costs” in this case are tied to “the enforcement, protection or waiver of any rights” under the relevant agreement and, hence, the circumstances canvassed show that an order for indemnity costs is appropriate.
Summary
- [20]Having considered the relevant issues raised, I am satisfied not only that the plaintiff should have an order for its costs of the application for the separate questions determined on 28 July 2017 but also that an order be made for assessment on the indemnity basis. It is unnecessary to specifically include the term “and incidental to”: see Jackson J’s discussion in Mio Art Pty Ltd v Macequest Pty Ltd & Ors (No 2) [2013] QSC 271 at [17]-[22].