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LA Assets AU Pty Ltd v Meiklejohns Accountants (Qld) Pty Ltd (No 2)[2019] QDC 8

LA Assets AU Pty Ltd v Meiklejohns Accountants (Qld) Pty Ltd (No 2)[2019] QDC 8

DISTRICT COURT OF QUEENSLAND

CITATION:

LA Assets AU Pty Ltd ATF The Property Assets Aust-NZ Unit Trust (ACN 152 862 907) & Ors v Meiklejohns Accountants (Qld) Pty Ltd (ACN 105 135 082) & Anor (No.2)[2019] QDC 8

PARTIES:

LA ASSETS AU PTY LTD ATF THE PROPERTY ASSETS AUST-NZ UNIT TRUST (ACN 152 862 907)

(First Appellant)

and

MOSHE ARAD

(Second Appellant)

and

DEVINA ARAD BROFMAN

(Third Appellant)

and

LA ASSETS AU PTY LTD ATF THE DEVINA BROFMAN FAMILY TRUST (ACN 152 862 907)

(Fourth Appellant)

and

PROPERTY ASSETS AUST-NZ PTY LTD (ACN 128 845 714)

(Fifth Appellant)

and

DEVINA ARAD-BROFMAN ATF DEVINA BROFMAN SUPERANNUATION FUND

(Sixth Appellant)

v

MEIKLEJOHNS ACCOUNTANTS (QLD) PTY LTD (ACN 105 135 082)

(First Respondent)

and

CAPITAL OPTIONS (AUST) PTY LTD (ACN 163 767 235)

(Second Respondent)

FILE NO/S:

D234/17

DIVISION:

Civil

PROCEEDING:

Application for Indemnity Costs Order

ORIGINATING COURT:

Magistrates Court at Southport

DELIVERED ON:

8 February 2019

DELIVERED AT:

Southport

HEARING DATE:

On the papers

JUDGE:

Kent QC DCJ

ORDER:

  1. The Appellants are to pay the Respondents’ costs of the appeal, on the standard basis up to the 21st September 2017 and thereafter on the indemnity basis, including as to the argument as to costs.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS –RELEVANT CONSIDERATIONS GENERALLY – where appellants were unsuccessful on appeal of procedural matters – where respondents now seek their costs on an indemnity basis – where respondents sent a Calderbank offer of settlement – where offer provided a reasonable timeframe and duration and made significant compromise – where the appellants’ difficulties should have been apparent – where appellants did not directly respond to offer – whether the Court should exercise its discretion to award the applicant its costs on the indemnity basis.

LA Assets AU Pty Ltd ATF The Property Assets Aust-NZ Unit Trust (ACN 152 862 907) & Ors v Meiklejohns Accountants (Qld) Pty Ltd (ACN 105 135 082) & Anor [2018] QDC 76, considered.

Roberts v Prendergast [2013] QCA 89, distinguished.

Westpac Banking Corporation v Jamieson & Ors [2015] QCA 84, distinguished.

COUNSEL:

K. Fleming QC for the Appellants

G Radcliff for the Respondents

SOLICITORS:

Senior Legal Pty Ltd for the Appellants

Legend Legal Group for the Respondents

Introduction

  1. [1]
    In this matter I delivered judgment on 1 May 2018 dismissing the appeal[1]. As the judgment indicates, my preliminary view was that the appellants ought pay the respondents’ costs of the appeal[2]on the standard basis, unless another order is appropriate.
  1. [2]
    Subsequent to the appeal there was correspondence between the parties indicating disagreement as to the appropriate procedure. The respondents were relying upon a Calderbank[3]letter in support of an application for indemnity costs. There was discussion as to whether or not the application could be heard on the papers, or whether a further hearing date was required. That further dispute included email correspondence of 10 May 2018 whereby the respondents indicated a disinclination to have the matter heard on the papers, rather, a further hearing date in court was sought. Eventually, however, consent directions were made to hear the matter on the papers.
  1. [3]
    Written submissions for each party were subsequently filed (the appellants on 16 May and the respondents on 23 May 2018), however unfortunately this did not come to my attention until the 29thJanuary 2019. Consequently it is unfortunate that this decision has been delayed in the context set out above.

Legislative Framework

  1. [4]
    The relevant legislation and rules governing the discretion to award costs is, broadly, as follows.
  1. [5]
    The jurisdiction for the appeal is conferred by s 45 of the Magistrates Court Act 1921 (Qld). Further, s 113 of the District Court of Queensland Act1967 provides that this court has the same powers, in such an appeal, as the Court of Appeal. These provisions are silent on costs. Thus UCPR 766 (1)(d) is relevant; the court may make the order as to the whole or part of the costs it considers appropriate.
  1. [6]
    Further, the provisions of Chapter 9 Part 5 UCPR relating to offers to settle do not apply.[4]Nevertheless, a Calderbank offer has relevance to, but is not decisive of, whether there should be a departure from the normal rule of costs on the standard basis.[5]

Background and Discussion

Respondents Submissions

  1. [7]
    The respondents were wholly successful in the appeal. The appeal had been instituted on 28 August 2017 consequent upon the (as I have found)[6]procedural orders made in the Magistrates Court at Southport on 31 July 2017, as set out in the primary judgment. On 15 September 2017, the respondents’ solicitors sent the Calderbankletter to the appellants’ solicitors. The offer referred to relevant features of the case including:
  1. (a)
    The challenged decision was an exercise of discretion and an order concerning matters of practice and procedure under the UCPR;
  1. (b)
    As a discretion was involved, appellate intervention was warranted only on the grounds identified in House v R;[7]
  1. (c)
    Since only matters of practice and procedure were involved, the Appellate Court should exercise the “added restraint” that the circumstance attracts and would “be extremely reluctant to interfere”;[8]
  1. (d)
    The Magistrate’s decision must be viewed against the background of r 5 and r 367 of the UCPR; and
  1. (e)
    In light of the above points, it was said that this court would likely find in favour of the respondents; no relevant features justified appellate interference.
  1. [8]
    The appellants did not respond to the Calderbankoffer either by acceptance or rejection, but three days later filed their Outline of Argument.
  1. [9]
    Although the Calderbankoffer was only open for seven days, it occurred at a time when it seems the appellants had sufficient time to consider the merits of the appeal. The offer expired six weeks after the date of the challenged orders, and three days before the appellants’ outline of argument was filed; thus the appellants’ preparation was presumably well advanced such that they were aware of the relative merits of the matter.
  1. [10]
    The terms of the offer were that the appellants should discontinue the appeal and that there be no order as to costs. This is said by the respondents to represent a significant compromise because significant costs had been expended by the respondents to that point. It is further said that the rejection of the offer was unreasonable in the circumstances as it dealt with the applicable principles including as accepted in my primary judgment. Thus the respondents argue that there should be an order for indemnity costs, including the costs of the application for indemnity costs.

Appellants’ Submissions

  1. [11]
    The appellants argue that, in accordance with Westpac Banking Corporation v Jamieson& Ors[9]there is no presumption in favour of indemnity costs merely because of a party to an appeal rejecting an offer and subsequently obtaining a less favourable judgment. Relevant features include:
  1. (a)
    The stage of the proceeding at which the offer was received;
  1. (b)
    The time allowed to consider the offer;
  1. (c)
    The extent of the compromise;
  1. (d)
    The offerees’ prospects of success, assessed as at the date of the offer;
  1. (e)
    The clarity with which the terms of the offer were expressed;
  1. (f)
    Whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejection.[10]
  1. [12]
    It is also said that the test is whether the litigant was “plainly unreasonable”. If an appellant has reasonable prospects in an appeal an order for indemnity costs is less likely. I note, however, that Fraser JA refers to the test being expressed as simply one of unreasonableness and it may be unclear how much the adverb “plainly” adds, or whether the test is properly so expressed (at [12]).
  1. [13]
    Thus the appellants oppose an order for indemnity costs on a number of bases:
  1. (a)
    It was not unreasonable to bring the appeal and an appeal of this kind is less amenable to comparison between offers and judgments than is a money claim;
  1. (b)
    The pursuit of the appeal was not plainly unreasonable;
  1. (c)
    The Calderbank offer was made at an early stage before the arguments had been fully developed;
  1. (d)
    The offer was open for a short period and had lapsed by the time Outlines were filed;
  1. (e)
    It is said that the Calderbankoffer was made on an erroneous premise;
  1. (f)
    It was not unreasonable for the appellants not to accept the offer in the short time available.
  1. [14]
    As to the timing, the offer was made at an early stage, but at a stage when the appellants, who had the carriage of the appeal, were clearly aware of the features bearing upon the merits. The Outline of Argument was filed three days after expiry of the offer; this suggests that the analysis of the case by the appellants and their legal representatives was well advanced at that stage. There was no response whatever to the offer; for example, it was not said by the appellants that they wished further time in which to consider the merits. The offer was not made at a time which inherently made it more difficult for the appellants to analyse. The respondents’ outline, when it later arrived, referred to similar features as had been ventilated by them in the offer.
  1. [15]
    As to its duration, although the time allowed to the offeree was short, it was at a time, as outlined above, when the appellants were or should have been aware of the merits of the appeal of which they had carriage. Given that the respondents had, and would reasonably be expected to have, expended significant costs at that stage, the extent of the compromise was not insignificant.
  1. [16]
    As to the appellants’ prospects of success at that stage, in my view, as outlined in the primary judgment, the difficulty always was that the challenged orders, properly assessed, were matters of practice and procedure, and the appellants always faced the difficulties in an appeal of that kind which are set out in the primary judgment.
  1. [17]
    The terms of the offer were clearly expressed and did set out an application for indemnity costs if the offer were rejected.

Utility of Calderbank offers on Appeal

  1. [18]
    Clearly reliance on a Calderbankoffer in a successful application for indemnity costs on appeal is far from straightforward; see Tector v FAI General Insurance Company Limited and Roberts v Prendergast, both mentioned above; and Deepcliffe P/L & Anor v The Council of the City of Gold Coast & Anor.[11]
  1. [19]
    In Westpac Banking Corporation v Jamieson& Ors(supra) both the appellant and the cross-appealing respondents were unsuccessful in the substantive appeal. The respondents had made a Calderbankoffer which represented a compromise of a relatively small amount of the existing judgment (5% or so). The Court concurred in the result that the usual costs order should not be departed from. Applegarth J analysed the factors referred to above and said that “in practice, a party may be required to make a substantial offer of compromise in order to gain the protection of an indemnity costs order…”[12]His Honour further observed:

[24]Banks, like all other parties, should be encouraged by the threat of an indemnity costs order to settle appeals which have especially good or especially poor prospects of success. The settlement of appeals in which the outcome is quite clear saves private and public resources. But when an appellant has reasonable prospects in an appeal, the interests of justice, including the correction of judicial error, usually will be served by the appeal being heard on its merits, rather than compromised under the threat of an indemnity costs order. The successful party is protected, but not completely indemnified, by the usual order as to costs. The unsuccessful party has to pay costs, but usually not on an indemnity basis. That is the usual case.”

  1. [20]
    His Honour considered Jamiesonnot to be an unusual case and continued:

[27] If the Jamiesons’ offer of compromise had been more generous, or the bank’s prospects of success on its appeal had been very poor, then the bank’s refusal of such an offer may have been unreasonable…”

In the circumstances the refusal was neither imprudent nor unreasonable and there were no special or unusual circumstances to justify a departure from the usual course.

  1. [21]
    However, as noted by Fraser JA in Roberts:

As the Victorian Court of Appeal observed in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2[13]),“deciding whether conduct is ‘reasonable’ or ‘unreasonable’ will always involve matters of judgment and impression” and “… are questions about which different judges might properly arrive at different conclusions” (at [11]).

This is exemplified to some extent by the differing conclusion reached by the Chief Justice in his Honour’s dissenting judgment in Roberts. It is important, however, not to view the prospects simply in hindsight, having already arrived at the result, but rather consider them as they appeared to the appellants at the time[14].

Conclusion

  1. [22]
    The present case is, in my view, different from Tector, Roberts,Deepcliffeand Jamieson:
  1. (a)
    The point on appeal was not a substantive one; I concluded in the primary judgment that the challenged decision was an exercise of discretion on a point of practice or procedure and thus the principles in Adam P Brown Male Fashions Pty Ltd v Philip Morris Incwere engaged – “added restraint” had to be shown before appellate interference was justified. This character of the appeal always presented an obstacle for the appellants, unlike Jamieson and other cases where there was clearly a substantive appeal on foot. Further, these aspects were pointed out in the offer and should in any case have been somewhat apparent;
  1. (b)
    It is not quite clear as to the extent of the compromise being offered, but according to the submissions made quite significant costs had been expended by the respondents by the time of the Calderbankoffer and thus the compromise was at least significant;
  1. (c)
    The timing and duration of the offer were both reasonable in the circumstances and the terms were clearly expressed and referred to indemnity costs.
  1. [23]
    Thus I cannot, in all the circumstances, accept the submission that the appellants’ prospects of success on the appeal were reasonable and, conversely, the Calderbankletter did represent a significant compromise. Thus my conclusion is that the refusal of the offer of compromise was unreasonable with the result that an order for indemnity costs of and incidental to the appeal, including the argument as to costs, should be made in favour of the respondents.

Footnotes

[1]LA Assets AU Pty Ltd ATF The Property Assets Aust-NZ Unit Trust (ACN 152 862 907) & Ors v Meiklejohns Accountants (Qld) Pty Ltd (ACN 105 135 082) & Anor [2018] QDC 76 (‘the primary judgment”)

[2]The previously often used phrase “of and incidental to” now seems otiose; see the terms of UCPR 678 as explained in Mio Art Pty Ltd v Macequest Pty Ltd & Ors No. 2 [2013] QSC 271 at [5] – [8] per Jackson J.

[3]I.e. a letter written pursuant to the principles set out in Calderbank v Calderbank [1975] 3 All ER 333.

[4]See Roberts v Prendergast [2013] QCA 89 at [26] and the cases there mentioned

[5]Supra at [27]; Tector v FAI General Insurance Company Limited [2001] 2 Qd R 463 at [5]

[6]Primary judgment at [20] – [24]

[7](1936) 55 CLR 499 at 504-5.

[8]See generally Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170.

[9][2015] QCA 84.

[10]Supra at [11].

[11][2001] QCA 396

[12]At [20].

[13][2005] VSCA 298 at [23]

[14]Roberts at [14] per Fraser JA

Close

Editorial Notes

  • Published Case Name:

    LA Assets AU Pty Ltd ATF The Property Assets Aust-NZ Unit Trust (ACN 152 862 907) & Ors v Meiklejohns Accountants (Qld) Pty Ltd (ACN 105 135 082) & Anor (No.2)

  • Shortened Case Name:

    LA Assets AU Pty Ltd v Meiklejohns Accountants (Qld) Pty Ltd (No 2)

  • MNC:

    [2019] QDC 8

  • Court:

    QDC

  • Judge(s):

    Kent DCJ

  • Date:

    08 Feb 2019

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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