Nortask Pty Ltd v Clarke Energy Australia Pty Ltd (No. 2)
[2017] QDC 284
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- Unreported Judgment
- Nortask Pty Ltd v Clarke Energy Australia Pty Ltd (No. 2)[2017] QDC 284
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Nortask Pty Ltd v Clarke Energy Australia Pty Ltd (No. 2)[2017] QDC 284
Nortask Pty Ltd v Clarke Energy Australia Pty Ltd (No. 2)[2017] QDC 284
DISTRICT COURT OF QUEENSLAND
CITATION: | Nortask Pty Ltd v Clarke Energy Australia Pty Ltd (No. 2) [2017] QDC 284 |
PARTIES: | NORTASK PTY LTD (plaintiff) v CLARKE ENERGY AUSTRALIA PTY LTD (defendant) |
FILE NO/S: | D 179/2013 |
DIVISION: | |
PROCEEDING: | Civil trial - costs |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 30 November 2017 |
DELIVERED AT: | Brisbane |
HEARING DATE: | Submissions in writing |
JUDGE: | McGill SC, DCJ |
ORDER: | The defendant pay the plaintiff’s costs of the proceeding assessed on the indemnity basis. |
CATCHWORDS: | COSTS – Offer to settle – offer under rules – whether other order appropriate – costs on indemnity basis. UCPR r 360. Balnaves v Smith [2012] QSC 408 – cited. Bulsey v State of Queensland [2016] QCA 158 – cited. Cameron v Nominal Defendant [2001] 1 Qd R 476 – cited. Castro v Hillery [2003] 1 Qd R 651 – cited. Chandler v Silwood [2016] QSC 120 – cited. Davies v Fay [1995] 1 Qd R 509 – cited. Ibbs v Woodrow [2002] QCA 298 – cited. Yamaguchi v Phipps [2016] QSC 170 – cited. Yara Nipro Pty Ltd v Interfert Australia Pty Ltd [2010] QCA 164 – cited. |
COUNSEL: | S J Armitage for the plaintiff N H Ferrett for the defendant |
SOLICITORS: | Clifford Gouldson Lawyers for the plaintiff HopgoodGanim for the defendant |
- [1]In this matter the trial took place before me in October and November 2016. Judgment was delivered on 3 November 2017, that the defendant pay the plaintiff $500,666.06 including $148,093.35 by way of interest. Written submissions were invited on the question of costs if the parties were unable to agree on the appropriate order. Written submissions have now been made by both parties. The plaintiff seeks the costs of the proceeding on the indemnity basis pursuant to UCPR r 360. In the alternative, the plaintiff seeks costs on the indemnity basis from 8 September 2012, immediately after the making of an offer to settle on Calderbank principles. The defendant concedes that the plaintiff is entitled to costs but submits that they should be on the standard basis only.
- [2]The proceeding arose out of a dispute over the plaintiff’s claims for various extras alleged to be payable in respect of civil construction work undertaken by the plaintiff for the defendant at a site near Mt Isa in 2007. The proceeding commenced on 15 January 2013, claiming $476,267 as money owing under the subcontract or in the alternative as damages for breach of contract; there were some further alternative claims advanced, and there was also a claim for interest. An amended statement of claim was filed on 6 February 2013, before the notice of intention to defend and defence were filed on 12 June 2013. There was a further amended statement of claim filed on 29 October 2015, the pleading on which the plaintiff went to trial, though the total amount claimed as money due under the subcontract or as damages for breach of contract remained the same; there was a difference in the quantum claimed in the alternative pursuant to the Trade Practices Act s 82.
- [3]An amended defence was filed on 8 April 2016, and a reply to that defence by the plaintiff on 30 May 2016. On 23 September 2015 another judge gave some directions including for amendment of the pleadings.[1]Directions were made for the provision of copies of certain disclosed documents by the plaintiff in PDF format copied to a CD-Rom, directions were given in relation to expert evidence, and the matter was to be set down for trial in March 2016. On 18 March 2016 I gave fresh directions for an amended defence and an amended reply, and for expert evidence from the defendant, and listed the matter for trial for five days from 13 June 2016. On 10 June however the trial was delisted by me, and adjourned to a date to be fixed at the next civil call-over. This was due to the failure of the defendant to be ready for trial, and the adjournment was on the basis that the defendant pay the plaintiff’s costs of the application and adjournment assessed on the indemnity basis. On 15 June 2016 the trial was set down to commence on 4 October 2016, and in due course it did.
- [4]The evidence before me discloses three offers to settle. On 7 September 2012, before the proceeding commenced, the plaintiff made an offer to settle in accordance with Calderbank principles for the sum of $250,000 including costs. The offer was open for acceptance until 1 October 2012, but was rejected in writing by the defendant on 28 September 2012.
- [5]On 5 May 2014 an offer was made by the plaintiff, to settle on terms that the defendant pay the plaintiff the amount of $250,000, with no order as to costs. The offer was open for acceptance for 14 days and was expressed to have been made in accordance with Ch 9 Pt 5 of the UCPR. It was not accepted. The defendant did not dispute that the judgment obtained by the plaintiff was more favourable than that offer, and that pursuant to r 360 “the court must order the defendant to pay the plaintiff’s costs calculated on the indemnity basis unless the defendant shows another order for costs is appropriate in the circumstances.” The defendant submitted that in all the circumstances here another order for costs is appropriate.
- [6]The third offer was made by the defendant itself by a letter to the plaintiff dated 12May 2016, for the defendant to pay the plaintiff $250,000, with no additional money payable in respect of legal or other costs, in return for a full discharge by each party to the other of all claims, liabilities or disputes whatsoever. The offer was open for a period of seven days, but was in fact rejected the same day. The offer referred to “this increased offer”, though it was not more generous than the offers that had previously been made and rejected or not accepted by the defendant; it may be that there were additional earlier offers on less generous terms made by the defendant about which I have not been told.
- [7]The defendant pointed out that the plaintiff was unsuccessful in relation to three of the seven claims made in the proceeding. One of these was a claim based on the general conditions of contract and the defendant’s failure to issue a timely response to the final payment claim, but this was a matter in respect of which there was virtually no evidence, just some formal evidence proving the making of the final payment claim and the absence of a timely response, so there were virtually no costs associated specifically with this claim.
- [8]The plaintiff also failed on what was described as a drainage excavation claim. I dealt with this on the basis that it was a claim in relation to the delay in the construction of the spoon drains. When the laying of the road base was delayed, it was agreed that the construction of the spoon drains would also be delayed, and both of these aspects of the work were dealt with the by the plaintiff later. Some of the costs, for example those associated with the plaintiff remobilising on the site, and later demobilising again, would in theory have been incurred in relation to both aspects of the work, but they were allowed in relation to that part of the plaintiff’s claim that succeeded. Ultimately it did not appear to me that there was any evidence of any additional costs specifically attributed to the construction of the spoon drains because they were constructed at this time rather than earlier. Obviously, as the claim failed because of an absence of evidence, no time was taken at the trial on evidence in relation to this claim. The written submissions on behalf of the plaintiff after the trial conceded that there were no additional costs recoverable specifically associated with this claim.
- [9]The third claim which was unsuccessful was a claim for additional costs associated with the failure of the owner of the site to remove under and above ground services; under the contract between the parties the plaintiff was entitled to have these removed by the owner, they were not so removed, and the plaintiff was put to additional costs as a result. There had never been any dispute about the entitlement of the plaintiff to some additional costs as a result of the presence of the under and above ground services, and the only argument was about quantum. Ultimately the plaintiff accepted in written submissions that this claim had been the subject of a compromise at an earlier time when a particular amount was paid in respect of the claim.
- [10]In the second amended statement of claim, the amount claimed for this was $32,800. It was not disputed at the trial however that the defendant had paid the sum of $24,740 in respect of this claim, so that on the face of the pleadings the amount in dispute in respect of this claim was $8,060, plus GST and interest. It was in fact defended simply on the basis that the money paid had been accepted in satisfaction of the claim, so again there was minimal evidence associated with this claim at the trial. In respect of the matters on which there was some substantial contention and evidence at the trial, the plaintiff was successful, though in relation to the claim because of the delay in the pavement work, the amount recovered was significantly less than the amount claimed.
- [11]The defendant relied on nine matters as justifying a departure from the order prima facie required by r 360. The first was that there was an issue of whether the contract between the parties was the formal contract, or whether there had been a prior contract which had never been validly superseded. Prior to the trial the parties had proceeded on the former basis, but it seemed to me clear enough from the evidence at the trial that that was not the situation, and I decided the case on the latter basis. Because I was in this respect dealing with the case on a basis different from that initially adopted by both parties, I considered it appropriate to set out in particular detail my reasons for coming to that conclusion, though in principle the point was simple enough: the defendant had prepared a written contract which the plaintiff changed and then signed and sent back, and the defendant made further changes, largely by not accepting changes made by the plaintiff, signed the contract and sent it back.
- [12]The proposition that in those circumstances there is no version of the formal contract on which the parties are ad idem is obvious enough. This is a matter which really ought to have been followed up at the time, by the defendant. The fact that it did not do so was another example of the characteristic I noted in my earlier reasons, of sloppy paperwork on the part of the defendant. Nevertheless, the absence of the formal contract did not make much difference in relation to most of the claims, though it may have assisted the plaintiff in making out the lean mix concrete variation claim. That claim succeeded on the basis that Mr Evans’ direction as to the assumption of the depth of the trench piers was the basis of the tender by reference to which the contract was formed when that tender was accepted. I have not considered, and do not propose to consider for the purposes of deciding the question of costs, whether the same outcome would have been achieved if the formal contract had become the operative contract. This was simply an example of a manifestation of the vicissitudes of litigation, and not particularly a reason justifying a different order as to costs.
- [13]The second matter relied on was that significant parts of the overall claim turned on issues of credit, which was not something readily capable of resolution ahead of a trial. There is some force in that, particularly in relation to the trench depth instruction, though the fact that such an instruction had been given was raised in documents by the plaintiff at quite an early stage. It is possible that Mr Evans’ poor performance in the witness box could not have been fully anticipated, but other matters ought to have been obvious enough prior to the trial, such as the fact that various documents produced by Mr Stephens purportedly recording the same thing were frequently significantly inconsistent. A good deal of the claim did not turn on issues of credit. On the whole I do not regard this as a significant matter justifying a departure from the prima facie order.[2]
- [14]The third matter relied on was that at the time the offer was made disclosure had not been completed. It is true that the plaintiff’s list of documents was not provided by way of disclosure until 26 June 2014, after the formal offer had been made, but the defendant has not identified any document not previously known by the defendant which emerged from disclosure which showed the plaintiff’s case in a significantly stronger position. The documents in the trial were overwhelmingly documents passing between the parties, and the plaintiff had provided a good deal of material to the defendant during the course of the work, and subsequently while pursuing the claims for variation before the proceedings commenced. Furthermore, the matters on which the plaintiff succeeded at the trial were all matters which had been clearly ventilated well before the formal offer was made.[3]
- [15]Apart from this, in early May 2013 the solicitors for the plaintiff provided the solicitors for the defendant with very extensive informal disclosure in connection with their response to a request for further and better particulars.[4]The next day there was a conference between the parties under clause 47.2 of the contract conditions to discuss the dispute, at which the defendant had the opportunity to ascertain all it needed to know about the plaintiff’s claim.[5]In these circumstances, it is unsurprising that no document has been identified as something found out on disclosure which made some real difference.
- [16]It was argued that once disclosure had been given the defendant made an offer in substantially the same terms as the formal offer. It is true that the amount offered by the defendant in May 2016 was the same as the amount offered by the plaintiff in May 2014, but it was in practice a substantially less favourable offer, because the plaintiff would have incurred a great deal of additional legal costs between May 2014, not long after the plaintiff’s initial reply had been delivered, and May 2016, at a time when the trial was due to commence the following month. A good deal more than completion of discovery had occurred during that two year period. I do not regard this as a significant factor.
- [17]The fourth matter relied on was that I was somewhat critical of the plaintiff’s documentation of the work undertaken in laying the road base, as well as of the defendant’s documentation, with the result that I ultimately had some difficulty in working out exactly what time had been spent doing what during that period. This was not something which operated adversely to the defendant, since the plaintiff recovered a good deal less than the amount the plaintiff claimed for this variation because of this deficiency. Despite this the judgment was still much more than the offer to settle.
- [18]The next matter relied on was that an amended statement of claim was served in October 2015, described as “comparatively late” and certainly well after the formal offer, and further and better particulars were delivered shortly before the trial. That was true, but it was not shown that anything that emerged from any amendment or late particularisation made any difference to the outcome or meant that the plaintiff’s case had become significantly stronger than would otherwise have been apparent to the defendant. In my view, the amendments are not of matters of any great consequence, and the particularisation was essentially of matters which ought to have been well known to the defendant anyway.[6]
- [19]Next it was said that the plaintiff’s success was not absolute, but that is not a factor of significance in relation to r 360. In the vast majority of cases where that rule is applied, claims for damages for personal injuries, the plaintiff recovers less than the amount claimed in the statement of claim, but that has never been regarded as a reason for ordering otherwise. The matters on which the plaintiff did not succeed in this proceeding occupied only a very small part of the trial and were not significant in terms of the overall costs incurred by the parties.[7]It is true that the judgment was for rather less than the amount claimed, but it was quite a lot more than the amount of the offer, particularly bearing in mind that the offer was inclusive of costs. In retrospect, the plaintiff’s offer was a very generous one to the defendant, and it ought to have grabbed it when it had the chance.
- [20]It was submitted that the plaintiff had substantially changed its position in relation to the significance of the term “uncontrolled fill,” in that the evidence at the trial did not prove up an allegation in the pleadings. That was true, but of no great significance in the overall outcome. The defendant is trying to rely on such small victories as it achieved in this litigation to justify some departure from the ordinary rule in relation to indemnity costs.
- [21]In this context the argument advanced was whether it was fair to impose some harsher cost consequences than normal when what was characterised as a “key” assumption by the plaintiff was abandoned at the trial. There was I think nothing particularly “key” about that aspect of the plaintiff’s case, but the particular order in relation to costs, for costs on the indemnity basis, is based not on the outcome of the trial per se, but on whether, with the benefit of hindsight, the plaintiff’s offer to settle ought to have been accepted by the defendant. That is the structure of the rule: prima facie if the defendant would have been better off accepting the plaintiff’s offer, the defendant pays costs on the indemnity basis. This is obviously a rule designed to encourage defendants to settle claims for amounts which, with the benefit of hindsight, prove to have been reasonable. In substance it encourages settlements by encouraging defendants to be generous in negotiations for settlement, something that was emphatically not a characteristic of the defendant’s position in this matter.
- [22]It was further submitted that the plaintiff’s approach involved a certain cynicism in seeking to recover the amount payable on the basis of the defendant’s failure to respond in a timely way to the final payment claim. There was nothing cynical about the plaintiff’s attitude in this: if anything it would have served the defendant right if the plaintiff had succeeded in recovering the whole of the amount claimed in the final payment claim because of the characteristically sloppy failure of the defendant to get its paperwork in order and respond in a timely way. It was not the plaintiff that failed to engage in sensible compromise; the history of the matter clearly demonstrates that it was the defendant that was adopting a blinkered and obdurate attitude to the plaintiff’s claim, and made a token effort of compromise only when confronted with the immediacy of a trial for which it was manifestly unprepared. If it is a question of which party made reasonable compromises in attempting to settle this matter, the honours are entirely with the plaintiff.
- [23]Finally it was submitted that the overall complexity of the matter told against a “harsh response” to the defendant’s failure at an early stage to resolve it. There was certainly some complexity in the matter, though a large part of it involved dealing with and clearing away the defendant’s unsatisfactory evidence. In any event, the function of the rule is to encourage compromise, and complex matters are particularly appropriate for compromise. Some aspects of the defendant’s approach to the plaintiff’s claim struck me as being uncompromising to the point of being unreasonable. I referred in my judgment to the defendant’s attitude to the services support tree slabs claim, which I shall not repeat. Its position was to some extent the same in relation to all of the claims that were successful: the lean mix claim succeeded largely because of Mr Evans’ attempts to secure a more favourable contract price by a process which came close to sharp practice, if not actual dishonesty.
- [24]The engine slab thickness claim arose simply because the defendant, having told the plaintiff (this time, indisputably, in writing) that the levels would be adjusted, did not follow through with that, but required the levels to be adhered to. It could hardly expect to change its mind in this way without having to pay something more. The delayed pavement claim also arose because it ought to have been obvious from the start that the road base should not be laid until after the earthing grid had been put in position, and indeed all underground services put in position. The difficulty arose because the defendant changed the specifications by taking this work away from the plaintiff after its initial quote. Indeed, the only real dispute about the pavement delay claim was the question of quantum. It is in these circumstances somewhat surprising that this matter had to be litigated at all, and that the very generous offer of compromise made by the plaintiff at an early stage was not accepted. In my view the complexity of the matter supports the underlying policy of r 360, to encourage compromise,[8] and is not a reason to depart from it.
- [25]Overall in my opinion even taken collectively these matters do not provide a sufficient reason to justify departure, in the circumstances of this case, from the prima facie position required by r 360. It is therefore appropriate to order that, in accordance with that rule, the defendant pay the plaintiff’s costs of the proceeding assessed on the indemnity basis. In the circumstances it is unnecessary to consider whether much the same result would be achieved because of the Calderbank offer made before the commencement of the proceeding.
Footnotes
[1]The timetable was not adhered to by either party, though the amended defence was much later than the amended statement of claim.
[2]Compare Chandler v Silwood [2016] QSC 120 at [6]. See also Davies v Fay [1995] 1 Qd R 509 at 510, where the unpredictability of the outcome was seen as a factor supporting an order for indemnity costs, under an earlier equivalent rule.
[3]Contrast Castro v Hillery [2003] 1 Qd R 651 at [72], [75].
[4]Affidavit of Gouldson sworn 23 November 2017, para 4(e).
[5]Ibid para 4(f).
[6]Ibbs v Woodrow [2002] QCA 298 at [9]; Yamaguchi v Phipps [2016] QSC 170.
[7]Bulsey v State of Queensland [2016] QCA 158 at [49]. See also Yara Nipro Pty Ltd v Interfert Australia Pty Ltd [2010] QCA 164 at [13], where the failure of an alternative claim which did occupy time and trouble at trial was held not to be a sufficient reason to order otherwise.
[8]Cameron v Nominal Defendant [2001] 1 Qd R 476 at [12]; Balnaves v Smith [2012] QSC 408 at [15].