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- Unreported Judgment
Twin Waters Realty Pty Ltd v Harvesting Rentals Pty Ltd QDC 253
DISTRICT COURT OF QUEENSLAND
Twin Waters Realty Pty Ltd v Harvesting Rentals Pty Ltd & Ors  QDC 253
TWIN WATERS REALTY PTY LTD ACN 0905444586 AS TRUSTEE FOR THE SIRATEL NO. 2 TRUST
HARVESTING RENTALS PTY LTD ACN 131485106
ELLENOR LOUISE LILFORD PARSONS
MY LEGAL PTY LTD ACN 613155481 AS TRUSTEE FOR THE MY LEGAL UNIT TRUST
Application for summary judgement
District Court at Maroochydore
11 December 2018
10 August 2018
Long SC DCJ
The first and second defendants are to pay the plaintiff’s costs of:
Procedure – Civil proceedings in State and Territory courts – Costs – Indemnity costs – Offers of compromise, payments into court and settlements
Procedure – Civil proceedings in State and Territory courts – INTEREST
Where the plaintiff sought declaration as to entitlement to and recovery of the retention sum in relation to the sale of a rent roll to the first defendant, with the second defendant being the guarantor of the first defendant’s contractual obligations – where the retention sum was held on trust by the third defendant – where the dispute over the retention sum ultimately settled – where the plaintiff seeks its costs on the indemnity basis– where there had been negotiation and settlement offers by the plaintiff which included allowance of the return of a relatively small portion of the retention sum to the first defendant – where after the filing of the plaintiff’s claim there was agreement to the release of most of the retention sum, proportionately to the plaintiff and the first defendant but a further amount remained in dispute – where that remaining dispute was finally settled by release to the plaintiff, after the filing of its application for summary judgement and only shortly before the hearing of that application – where ultimately the plaintiff vindicated its pursued claim to the retention sum – where the defendants had no reasonable prospects of defending that further claim – whether and to what extent the plaintiff should have its costs on the indemnity basis – determination as to the entitlement of the plaintiff to an award of interest
Civil Proceedings Act 2011 s 58
Uniform Civil Procedure Rules rr 288, 292, 444, 702, 703
Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Cosgrove v Johns  QCA 157
F.A. Pidgeon & Son Pty Ltd v Daneshurst Investments Pty Ltd & Ors  1 Qd R 448
John S Hayes & Associates Pty Limited v Kimberley-Clarke Australia Pty Ltd (1994) 52 FCR 201
Rosniak v Government Insurance Office (1997) 41 NSWLR 608
Smits v Tabone  QCA 337
K Kimball (sol.) for the plaintiff
The second defendant appeared on her own behalf and for the first defendant
Sajen Legal for the plaintiff
The second defendant appeared on her own behalf and for the first defendant
- In the end result this matter effectively concerns:
- (a)the determination of the entitlement of the plaintiff as to an award of interest on the debt ultimately paid by the first defendant; and
- (b)an application for costs in respect of the proceeding and the application which effectively brought the proceeding to an end.
- On 15 March 2018 the applicant filed a claim and statement of claim in respect of a dispute as to entitlement to the retention sum held by the third defendant, as “Retention Stakeholder”, pursuant to a contract between the plaintiff and the first and second defendants. That contract was made on or about 2 June 2017, as an agreement for the sale of a rent roll, in essence the sale to the first defendant of part of a business conducted by the plaintiff by assigning certain agent appointments pursuant to the Property Occupations Act 2014 and relating to the residential letting of real property. The second defendant was a party to the agreement as a director of the first defendant and guarantor of its contractual obligations.
- On 1 August 2017, settlement of that agreement occurred, with the payment of the balance of the purchase price of $181,170.70 (including deposit and GST). From the settlement sum, an amount of $49,410.19 was paid, pursuant to clauses 2.4.4(b) and 2.9 of the contract, to the third defendant, which had acted as the solicitor for the plaintiff in the sale transaction, to be invested in an interest bearing bank account, with the distribution of the retention sum and accrued interest to occur in accordance with the provisions of clause 14 of the contract. It is, in the first instance, only necessary to note that clause 14.1 provides:
“The Retention shall be retained by the Retention Stakeholder as referred to in Item 13, subject to clause 2.9 until 5.00pm on the applicable retention date where upon the retention stakeholder shall, subject to any claim by the Buyer in accordance with the terms of this clause 14, pay the retention to the Seller.”
- In Item 13, the third defendant is expressly named as the “Retention Stakeholder”. And “retention date” is defined in clause 1.1.29 as meaning:
“…the date one hundred and twenty (120) days from the date upon which payment for a specific property is received by the seller from the buyer or any extension thereof pursuant to the terms of clause 14.5 hereof.”
- At settlement on 1 August 2017, there was to be the assignment of the authorities in respect of 43 properties.
- As is correctly pointed out by the plaintiff and in accordance with clause 14.1, it has consistently asserted its entitlement to the retention sum (including accrued interest) on the basis that no engagement of clause 14, such as to lead to any other outcome, had been claimed by the second defendant, not later than 5.00pm on 29 November 2017. However, and when, on 30 November 2017, the third defendant sought to obtain confirmation of authorisation to pay the retained funds to the seller, the solicitors then acting for the first defendant indicated that:
“Before any funds are dispersed to your client there is one issue that needs to be clarified.”
It was then outlined that:
“Under the Rent Roll Agreement there were 43 properties that formed part of the sale. Our client advises us that in fact that on settlement there were only 39 properties.
Our client informs us that the four properties were to be adjusted at the end of the retention period.”
- Subsequently and on 4 December 2017 and although in response to an email marked “without prejudice” by the third defendant, an open response by email indicated that there was “no consent or authorisation” of “the release of any part of the trust monies retention held in your trust account pending our clients further instructions”. Further and on 6 December 2017, the third defendant emailed the solicitors for the first defendant (again marked “without prejudice”) and in an open response, it was stated:
“The buyers request is not acceptable to the seller.
Our client is only prepared to release the sum of $2,944.66 to the buyer as previously offered.
The other three properties were transferred to the buyer at settlement and it is clearly the case that the buyer failed to give notice by 5PM on the retention date as required under clause 14 of the agreement. Clause 14.7 of the agreement provides that we have irrevocable authority to pay all retention funds to our client and the buyer has no grounds to dispute this.
Please provide the authority we requested in our email to your office dated 30 November 2017, as a matter of urgency.”
- The response from the solicitor for the first defendant was:
“We do not have authority to authorise you to release any of the trust monies from your trust account. We are no longer acting in this matter.
We will advise you of the name of solicitors whom our former client may engage to act once this information is to hand.” 
- Subsequently, the third defendant dealt directly with the first and second defendants as litigants in person, as is now the case before the court. For present purposes, reference to the subsequent material remains complicated by the communications from the third defendant, being marked “without prejudice”.
- Later, the plaintiff had separate legal representation and by open letter sent on behalf of the plaintiff, by email dated 2 February 2018, there was express recognition that the amount of $2,944.66 was paid by the buyer in respect of “unit 1/3 Barooga Crescent, Mooloolaba” and “by mistake” and included an open offer of resolution to avoid prospective legal proceedings, upon the basis that the release of $46,465.53, being the amount ultimately released to the plaintiff, be so released and, with the payment of $2,915 for the plaintiff’s legal costs to that point; 
- It will be necessary to return to this and some further correspondence, but for present purposes it should also be noted that prior to the filing of the application for summary judgment, the plaintiff sent correspondence pursuant to UCPR 444, pointing out a number of obvious difficulties and deficiencies in the defence filed on 12 April 2018 and giving notice of intention to apply for that defence to be struck out and, having regard to an apparent lack of prospect of any real defence to the plaintiff’s claim and in the absence of an amended defence, an application for summary judgment, in both instances with costs to be claimed on an indemnity basis. There was no response, until 9 May 2018, when and in response to a letter from the third defendant, which status had, by then, been formalised by the institution of the proceedings before the court, and seeking written consent and agreement for the monies held in trust to be paid into court and so as to allow for the third defendant to be released from the proceedings, the first and second defendants agreed to the authorise the respective payments of $38,241.32 to the seller and $2,944.66 to the first defendant but to otherwise state:
“The remaining balance which is currently being disputed of $8,224.21 is to remain in trust. This amount is for the reclaw (sic) of two properties (1-2/24 Hegarty Bli Bli) due to management duties required by the landlord which were outside normal property management duties. LJ Hooker did not advise of the additional duties pre settlement. These duties included an extra 12 inspections of the properties yearly to conduct water metre readings and electricity readings, resulting in additional administrative tasks including invoicing of consumption charges to the tenants any necessary account reminders/follow up. The work load on these properties was more than double. The management was mutually terminated, when one property became vacant, the owner wouldn’t amend rental amount to meet the current market and the property sat vacant for extended period.”
It is to be noted that following that, such distribution occurred in accordance with the consent of the plaintiff, given on 15 May 2018.
- On 12 July 2018 and after a further attempt by the solicitors for the plaintiff, to obtain the agreement of the first and second defendants to allow the third defendant to be released from the proceedings, upon his paying the balance of the retention fund into court, the plaintiff made application for:
- Summary judgment to be entered against the first and second defendants for all or part of the claim including interest and costs, pursuant to UCPR 292;
- Default judgment be entered against the third defendant, pursuant to UCPR 288;
- Various declarations and other orders and alternative orders, including that:
- (a)The first and/or second defendant pay to the plaintiff interest on the monies owed to the plaintiff pursuant to the contract at the rate of 15 per cent per annum or alternatively pursuant to s 58 of the Civil Proceedings Act 2011; and
- (b)That the first defendant and/or second defendant pay the plaintiff’s costs of the application and the proceedings on an indemnity basis.
- That application was listed for hearing on 10 August 2018. However at the outset of that hearing, the Court was informed that the balance of the retention sum had been paid to the plaintiff, in accordance with the email sent by the first and second defendants to the third defendant, on 6 August 2018, authorising that release.
- In this regard and although the claim and statement of claim sought to have all of the retained amount distributed to it, as at 30 November 2017, the retained amount was identified in the statement of claim as the amount ultimately recovered: $46,465.53, with repetition of the acknowledgement of the amount of $2944.66 having been paid by mistake. Therefore and in essential overview:
- (a)The entitlement to the retained amount pursued by the plaintiff in this court, was recovered by distributions made by the third defendant:
- (i)On 16 May 2018, as to the sum of $38,241.32; and
- (ii)On 6 August 2018, as to the sum of $8,224.21.
- (b)That occurred only after the filing of the claim, on 15 March 2018 and in the case of the latter payment, after the application that came before the Court on 10 August 2018, was filed on 12 July 2018; and
- (c)Accordingly, there remained, on 10 August 2018, no utility in the declaratory relief sought by the plaintiff or any basis for any order as to the distribution of the monies that had been retained by the third defendant.
- In this context it is desirable to also note from the evidence of correspondence between the parties, that:
- (a)Upon a “without prejudice” basis, the plaintiff offered a resolution, on 30 November 2017, by distribution of the $2,944.66 back to the first defendant and the balance of the retention amount to the plaintiff;
- (b)On 21 December 2017, the plaintiff further offered on a “without prejudice” basis, that there be a similar distribution except that an amount of $8,224.21 not be distributed to the plaintiff but remain in trust until the resolution of “court proceedings”.
- The primary claim for an award of interest is upon the basis of clause 19.1 of the contract:
If the Buyer defaults in payment of any money when due, the buyer must pay interest on the unpaid amount at the rate of 15 per cent (15%) per annum from the date when payment became due to the date of such payment. Any judgment for unpaid monies bears interest at the same rate computed from the date of judgment until payment. The payment of interest does not prejudice any other right or remedy of the Seller.”
However, that reliance is problematic, because there has been no actual default by the first defendant as to any payment, when due. And in the plaintiff’s written submission in respect of the application for summary judgment the contention as to the default of the first defendant was couched in terms of breach of contract, alternatively by:
“(a) failing to pay the full purchase price under the Contract to the plaintiff when due; and/or
- (b)repudiating the contract by purporting to revoke the Irrevocable Authority.” 
And it was further expressly noted:
“In light of the apparent dispute as to entitlement to the Retention, the Third Defendant took the view it could not release the Retention to the Plaintiff despite the granting of the Irrevocable Authority by the Contract.”
- Further the contractual context for the operation of clause 19.1 included the obligation upon the retention stakeholder, pursuant to clauses 14.1 and 2.9 of the contract, to invest the retained sum:
“The Retention Stakeholder, upon provision in writing by each of the Seller and the Buyer of their respective Tax File Numbers, is irrevocably authorised to invest the Retention in an interest bearing account, with a Bank. The interest accruing thereon shall be shared between the Seller and the Buyer in like proportion to the distribution of the applicable Retention subsequent to the Retention Date.”
Consistently with this provision, the plaintiff’s claim filed on 15 March 2018 sought, in the first instance, declarations as to entitlement to and payment to the plaintiff of both “the Retention Amount and any interest accrued thereon”. Despite this, the Court was simply informed on 10 August 2018 that such investment did not occur and as it is understood the retention amount was simply kept in the third defendant’s practice trust account and no explanation as to why this happened appears in the material placed before the Court.
- Accordingly, it is not established that there is any entitlement to interest in accordance with clause 19.1 of the contract.
- The alternative submission calls for an exercise of discretion pursuant to s 58(3) of the Civil Proceedings Act 2011. The plaintiff contends for the rate of 5.5 per cent and an overdue period commencing from 29 November 2017. The claimed rate was not expressly challenged by the first or second defendants. But, in the circumstances and because this basis of recovery attaches to the exercise of the jurisdiction of the Court, an appropriate exercise of discretion might allow recovery from the date of the filing of the claim and therefore the making of this alternative claim. That would allow for recovery of an amount of $611.50, calculated as follows:
- (a)$46,465.53 at 5.5% pa, for 73 days (15 March to 16 May 2018): $511.12; and
- (b)$8,224.21at 5.5% pa, for 81 days (16 May to 6 August 2018): $100.38.
- However, the power provided pursuant to s 58(3) is only as to the inclusion of interest “in the amount for which judgment is given” and “for all or part of the amount”. And here there is and can be no order as to the payment of money and therefore there can be no inclusion of any interest. In short, the appropriate conclusion is that s 58(3) does not empower a court to award interest on principal sums already paid.
- The plaintiff sought that the first and/or second defendants pay its costs of the proceeding and the application on the indemnity basis pursuant to UCPR 703 and the alternative submission is that the costs of the application be on the indemnity basis and the costs of the proceeding allowed on the standard basis pursuant to UCPR 702.
- Having regard to the substantial effective success of the plaintiff in respect of the relief sought in the claim and that this has occurred in the context of this claim and the application filed on 12 July 2018 and that it was only when the return date of that application for summary judgment was imminent that the first and second defendants finally conceded the only contention remaining in issue on the claim and that application, there is a clear basis for an award of costs for the plaintiff in respect of the proceedings and the application.
- By reference to passages in various authorities, including Colgate Palmolive Co v Cussons Pty Ltd, the plaintiff sought that the award of costs be on the indemnity basis. Such principles recognise that such an order is made on the basis of departure from the usual course, upon recognised tests such as “as and when the justice of the case might so require” and “some special or unusual feature in the case to justify the court in departing from the ordinary practice”.
- In Cosgrove v Johns and in reference to the principles articulated in the Colgate Palmolive v Cussons decision and in John S Hayes & Associates Pty Limited v Kimberley-Clarke Australia Pty Ltd, it was, amongst other things, recognised that such an unusual circumstance that may warrant departure from the ordinary course, may be undue prolongation of a case by groundless contentions. Usually, it is necessary to identify unreasonable conduct on the part of the litigant to be burdened with the order. For example and in Rosniak v Government Insurance Office it was noted that:
“… the court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation. This is because party and party costs remain in the norm, although it is common knowledge that they provide an inadequate indemnity. Any shift to a general or common rule that indemnity costs should be the order of the day is a matter for the legislature or the rule-maker.”
In Smits v Tabone, the Court of Appeal noted this passage as “sounding a cautious note”. However the following observations were also made:
“ In Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359, Powell J expressed the view that an order for indemnity costs was warranted where in effect the proceedings had no reasonable prospect of success.
 Rolfe A/JA (as he then was) in Huntsman Chemical Company Australia Ltd v International Pools Australia Pty Ltd (1995) 36 NSWLR 242 at 273 after reviewing the authorities said:
‘In my opinion the authorities support the proposition that where a party persists in a hopeless case, that justifies, for all the reasons given, the making of an order for costs on an indemnity basis.’
 See also cases such as Di Carlo v Dubois & Ors  QCA 225.”
- It may be noted that the strength of the plaintiff’s claim for the release of the retention amount to it after 5.00pm on 29 November 2017, lies in understanding the absence of any contention that the remaining provisions of clause 14 were ever engaged, so as to preclude that occurring. Moreover, it is to be noted that after the initial claim of the first defendant that there were additional assignments for which payment was made but which did not occur and when this was pointed out to be incorrect, on 6 December 2017, the position changed, as notified on 20 December 2017, to be for the “reclaw” of three properties or assignments, with the notation that:
“Mike is fully aware of the incompetency of our solicitor (who is no more) and was sympathetic to the situation at the time, on the phone. Please note we will not be engaging another solicitor to act on our behalf regarding this matter of any litigation you wish to follow through with.”
And this was later clarified to be a right asserted upon the basis that:
“Further note, the 2 properties now still in dispute, our office will show evidence that LJ Hooker were providing management outside what is normally accepted by agencies. This extra work information was withheld from our office and couldn’t be seen through normal due diligence checking.”
- The defence filed on 12 April 2018 simply asserted reliance upon the following facts:
“1. Plaintiff/sellers solicitor was advised by email on the day the retention period ended 30th of November 2017 – within the time frame for a clawback of the properties listed in the counter claim.
- 1.3 Baroogra was never transferred from the plaintiff to the defendant and the undisputed amount is still yet to be reimbursed.
- Plaintiff and defendant verbally agreed as per the counter claim on the 13th of December.
- 1.24 Hegarty Crt & 2.24 Hegarty Crt should not have been included in the sale as the LJ Hooker was providing management outside of normal acceptable property management practices not included in the form 6.”
- It has never been clarified nor become evident as to:
- (a)What verbal agreement or ‘counterclaim’ may have occurred or been identified on 13 December;
- (b)How any claim ‘clawback of the properties’ related to any entitlement pursuant to clause 14 of the contract; or
- (c)Any basis for any counterclaim against the plaintiff.
And no such contentions were ultimately sought to be pursued before the Court.
- In addition to the open offer in the letter dated 2 February 2018, the plaintiff relies upon the “without prejudice” communication by email, on 21 December 2017, indicating:
“Your latest request remains unacceptable to our client. Our client should not be penalized for your lawyer’s error.”
And proposing that the impasse be resolved by:
- Payment of $2,944.66 from the trust account to the buyer;
- Release of $38,241.32 to the plaintiff; and
- That the amount in dispute $8,224.21 and identified as the purchase price relating to properties at 1/24 and 2/24 Hegarty, remains in trust until resolution of entitlement to those funds by court proceedings.
The response, by email on the same day, apart from indicating rejection of the proposal, relevantly included:
“The amount of $2,944.66 should have been released back to our office over four months ago, LJ Hooker are fully aware this property never transferred over and shouldn’t have been in the first settlement amount at all.
Further note, the 2 properties now still in dispute, our office will show evidence that LJ Hooker were providing management outside what is normally accepted by agencies, this extra work information was withheld from our office and couldn’t be seen through normal due diligence checking.”
It should be noted that this does not appear to raise any issue covered by clause 14 of the contract and which, therefore, could have given rise to any notification pursuant to that clause and so as to prevent the distribution of the retention sum to the plaintiff, in accordance with clause 14.1. And neither was any such contention subsequently pleaded by way of defence and neither was any basis of claim over and above the amount of $2,944.66 of the retention sum, ultimately maintained.
- However and notwithstanding that the plaintiff may, in these circumstances, be seen to have vindicated its claim, made from the outset, to be entitled to the distribution of $46,465.53 from the retained amount, the delay in the first distribution of the majority of that amount must be noted to have occurred in the further context that:
- (a)notwithstanding that the plaintiff also acknowledged that the first defendant could have a distribution or repayment of the albeit less significant sum of $2,944.66 and subsequently openly acknowledged that entitlement upon the basis of a payment made by mistake, it was not until 16 May 2018 that these distributions were agreed and occurred; and
- (b)prior to that, the first defendant’s entitlement to that distribution was just as much used as a bargaining tool in the negotiations between the parties, as the first defendant sought to use any entitlement of the plaintiff which was not in reality in dispute.
- Such conclusions may also be seen to be a similar impediment to the plaintiff’s reliance on its offers, made prior to 16 May 2018. However on and from 16 May 2018, there can be no conclusion other than persistence with an unmeritorious case and one without any reasonable prospects of success. But it is also necessary to note the resolution of that position on 6 August 2018 and also the limitations as to the success of the plaintiff in the remaining issues litigated on 10 August 2018. Accordingly, it is appropriate to allow the plaintiff:
- (a)Its costs of the proceeding on the standard basis up to and including 15 May 2018; and
- (b)Its costs of the proceeding on and from 16 May 2018 and its costs of the application filed on 12 July 2018, on the indemnity basis up to and including 6 August 2018 and thereafter on the standard basis.
- Therefore, the appropriate orders are only that:
- The first and second defendants are to pay the plaintiff’s costs of:
- (a)The proceeding, as agreed or to be assessed on the standard basis, except for the period from 16 May 2018 to 6 August 2018 which is to be assessed on the indemnity basis; and
- (b)The application filed on 12 July 2018, as agreed or to be assessed on the indemnity basis, until 6 August 2018 and thereafter on the standard basis.
Affidavit of M C Adams, filed 12 July 2018, at Exhibit MCA–11and MCA–12 at pp 111-112.
Exhibit MCA–12 at p 112.
Exhibit MCA–13 at p 113.
Exhibit MCA–14 at p 114.
Exhibit MCA–18 at p 119.
Exhibit MCA–18 at pp 118–121.
Exhibit MCA22 at p 139.
 Exhibit MCA–23 at p 141.
Exhibit MCA–24 at p pp 142–143.
Affidavit of VRF Berry filed 10 August 2018 at  and Exhibit VRFB–19 at p 23.
Statement of claim, filed 15 March 2018, at .
Exhibit VRFB–13 at p 8.
Exhibit VRFB–15 at p 10.
Plaintiff’s written submissions in support of application, filed 10 August 2018, at .
Ibid at .
Cf: F.A. Pidgeon & Son Pty Ltd v Daneshurst Investments Pty Ltd & Ors  1 Qd R 448 at 450-451.
S 15 Civil Proceedings Act 2011 and UCPR 682(1).
(1993) 46 FCR 225 at -.
 QCA 157 at .
(1994) 52 FCR 201 at 203.
(1997) 41 NSWLR 608 at ; as cited with approval in Smits v Tabone  QCA 337 at .
 QCA 337 at .
Exhibit MCA–14 at p 114.
Exhibit MCA–15 at p 115.
Exhibit MCA–16 at p 116.
Exhibit MCA18 at p 119.
Exhibit MCA16 at p 116.
See para [ ]
- Published Case Name:
Twin Waters Realty Pty Ltd v Harvesting Rentals Pty Ltd, Ellenor Louise Lilford Parsons & My Legal Pty Ltd
- Shortened Case Name:
Twin Waters Realty Pty Ltd v Harvesting Rentals Pty Ltd
 QDC 253
11 Dec 2018