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- Unreported Judgment
Hart Industries Pty Ltd v Riggcorp Pty Ltd (No 2) QDC 266
DISTRICT COURT OF QUEENSLAND
Hart Industries Pty Ltd v Riggcorp Pty Ltd & Anor (No 2)  QDC 266
HART INDUSTRIES PTY LTD (ACN 060 151 680)
RIGGCORP PTY LTD (ACN 621 342 943)
DAVID GEOFFREY HEMSLEY LONGRIGG
PAUL EDWARD HART
(defendant by counterclaim)
20 October 2020
On the papers
Cash QC DCJ
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW EVENT – GENERAL PRINCIPLES AND EXERCISE OF DISCRETION – where plaintiff commenced a claim against the defendants – where following the trial judgment was made for the plaintiff for total amount of claim plus interest – whether costs for the claim to be assessed on standard or indemnity basis – whether scale for assessment of costs on standard or indemnity basis
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – ISSUES AND COUNTERCLAIMS – where first defendant counterclaimed against plaintiffs but discontinued the counterclaim at the start of the trial – where court may make orders it considers appropriate – whether no order as to costs for the counterclaim should be made
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INTERLOCUTORY PROCEEDINGS – COSTS RESERVED – where plaintiffs made application to dispense with the signatures of the defendants to request a trial date – where, on the day before the application, the parties agreed to a consent order for its dismissal – where costs were reserved – whether costs should follow the event or be awarded to the defendants on the basis the application was ‘premature’
Civil Proceedings Act 2011 (Qld), s 26(2)
Uniform Civil Procedure Rules 1999 (Qld), r 5, r 307, r 357, r 360, r 361, r 363, r 685, r 697, r 698
Asset Loan Co Pty Ltd v Mamap Pty Ltd  QDC 295
Colgate Palmolive v Cussons (1993) 46 FCR 225; 118 ALR 248;  FCA 801
Cosgrove v Johns  QCA 157
Di Carlo v Dubois  QCA 225
Hart Industries Pty Ltd v Riggcorp Pty Ltd and Anor  QDC 214
Jones v Millward  1 Qd R 498;  QCA 76
Mackay Taxi Holdings Ltd v Lowe  QMC 7
Surfstone Pty Ltd & Anor v Morgan Consulting Engineers Pty Ltd  QSC 322
Tickell v Trifleska Pty Ltd (1991) 25 NSWLR 353
S Gerber for the plaintiff/defendant by counterclaim
P Travis for the defendants
Mooloolaba Law for the plaintiff/defendant by counterclaim
Axia Litigation Lawyers Pty Ltd for the defendants
- On 18 September 2020 I gave judgment for the plaintiff for the total amount of its claim plus interest. The amount claimed was a little more than $65,000. At the end of the trial the parties indicated they wished to make submissions as to costs. Subsequently, written submission were received from each party. In issue are the costs of the claim, the costs of the first defendant’s counterclaim (which was discontinued with leave at the commencement of the trial), and the costs of an application by the plaintiff to dispense with the need for the defendants to sign a request for trial date. It is convenient to commence by setting out some of the relevant history of the matter.
- The plaintiff (Hart Industries) commenced the claim on 29 March 2018 against the first defendant (Riggcorp) and the second defendant (David Longrigg, a director of Riggcorp). On 2 May 2018 the defendants filed their notice of intention to defend. The first defendant also counterclaimed against the plaintiff and Mr Paul Hart, a director of the plaintiff. The counterclaim alleged that the plaintiff and Mr Hart misled the defendants contrary to the Australian Consumer Law. There was also a modest claim concerning alleged unjust enrichment. The plaintiff and Mr Hart answered the counterclaim on 17 May 2018. The answer was amended twice, first on 19 December 2018 and again on 27 February 2019. There followed internecine skirmishing about disclosure, expert reports and directions. Both sides generated an abundance of correspondence with the usual references to rule 5 of the Uniform Civil Procedure Rules 1999 (Qld) (‘UCPR’) and threats to rely upon the correspondence on the question of costs.
- Soon after the pleadings closed in early 2019 the plaintiff moved to have the matter listed for trial. The skirmishing continued. Eventually, on 4 October 2019, the plaintiff and Mr Hart applied for the matter to be set down for trial even though the defendants had not signed a request for trial date. The day before the application was to be heard the parties agreed to a consent order for its dismissal and reserving the question of its costs. In February 2020 the claim proceeded to trial over three days. As noted, the defendants were given leave to discontinue their counterclaim at the commencement of the trial.
Costs of the claim
- The plaintiff seeks their costs of the claim on an indemnity basis, relying upon rule 360 of the UCPR. The defendants accept they must pay the costs of the claim. But they say the costs should be assessed on the standard basis and on the Magistrates Court scale pursuant to rule 697 as the relief gained by the plaintiff was a judgment that could have been given in the Magistrates Court. These two rules are set out below.
360 COSTS IF OFFER BY PLAINTIFF
- (a)the plaintiff makes an offer that is not accepted by the defendant and the plaintiff obtains an order no less favourable than the offer; and
- (b)the court is satisfied that the plaintiff was at all material times willing and able to carry out what was proposed in the offer;
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.
697 COSTS OF PROCEEDING IN WRONG COURT
- (1)Subrule (2) applies if the relief obtained by a plaintiff in a proceeding in the Supreme Court or District Court is a judgment that, when the proceeding began, could have been given in a Magistrates Court.
- (2)The costs the plaintiff may recover must be assessed as if the proceeding had been started in the Magistrates Court, unless the court orders otherwise.
Appropriate scale for the assessment of costs
- It is convenient to deal first with the appropriate scale against which the costs of the claim are to be assessed, whether that be on the standard or indemnity basis. Rule 360 is a rule of general application and says nothing of the scale against which the costs are to be assessed. Rule 697 concerns proceedings in the ‘wrong court’ and is intended to discourage inefficient use of the resources of litigants and the courts. The money limit in the Magistrates Court at the time the proceedings were commenced was $150,000. The relief obtained by the plaintiff was one that at all times it could have been given by the Magistrates Court. In such circumstances rule 697 requires that the plaintiff’s costs are to be assessed as if the proceedings had been started in that court, unless the court otherwise orders.
- If the costs are to be assessed as if the proceedings were started in the Magistrates Court, it is still open to order that the costs be assessed on the indemnity basis. Whether costs are on the indemnity basis or standard basis the appropriate scale to which the assessor is to have regard is, in this case, that in Part 3 of Schedule 2 to the UCPR. That is because the amounts claimed and recovered by the plaintiff both exceed $50,000.
- Rule 697 does confer a discretion to make a different order. A matter that might be relevant to this discretion, but which no party raised, is the absence of any application to transfer the proceedings to the Magistrates Court. Such an order was arguably open pursuant to section 26(2) of the Civil Proceedings Act 2011 (Qld). I say arguably because it may be the plaintiff would have resisted an application on the basis that the Magistrates Court does not have jurisdiction to order delivery up of goods on a claim in detinue. Whatever might have been the outcome of an application to transfer the proceedings, the defendants seemed content to litigate the matter before the District Court. In some circumstances acquiescence of this kind might be a matter that suggests the costs should be assessed against the District Court scale. But given the claim in detinue was hardly pursued at the trial and delivery up of the goods was never a realistic outcome the better view is that these proceedings should have been brought in the Magistrates Court. As such assessment of costs having regard to the appropriate Magistrates Court scale remains appropriate.
Indemnity or standard costs?
- The plaintiff’s claim for indemnity costs depends upon an offer made to the defendants on 16 August 2019. The offer was expressed as being made under ‘Chapter 9 Part 5’ of the UCPR and was open for 15 days. In it the plaintiff offered to accept the total amount of its claim (to be paid within seven days), to waive the plaintiff’s claim to interest and for the defendants to pay the costs of the claim assessed on the District Court scale. The plaintiff also asked the defendants to discontinue the counterclaim and pay the defendant by counterclaim’s costs assessed on the District Court scale. The offer was not accepted.
- The offer was expressed in the following terms:
The plaintiff Hart Industries Pty Ltd and the defendant by counterclaim Paul Hart offer to settle D37/18 on the following terms
1.1 In respect of the plaintiff’s claim in D37/18
1.1.1 The first and second defendants (Riggcorp Pty Ltd and David Longrigg) will within 7 days jointly and severally pay the plaintiff the sum of $65,308.78; and
1.1.2 The plaintiff will waive its claim for interest; and
1.1.3 The first and second defendants will within 7 days consent to an order that the first and second defendants jointly and severally pay the plaintiff’s costs of the claim to be assessed on the District Court scale; and
1.2 In respect of the first defendant’s counterclaim in D37/18
1.2.1 The first and second defendants will within 7 days consent to an order that the first defendant’s counterclaim is dismissed; and
1.2.2 The first defendant will within 7 days consent to an order that the first defendant pay the defendant by counterclaim’s costs of the counterclaim to be assessed on the District Court scale.
- The defendants say that the offer was not one that complied with the requirements of the UCPR. First, it is said that the offer was expressed in a manner that left Mr Longrigg, the second defendant, ‘hostage to a decision by another party’ being the plaintiff in the counterclaim. The submission faces the difficulty that the other party was the plaintiff in the counterclaim and also the first defendant, Riggcorp. Mr Longrigg was the director of Riggcorp. It can be assumed that at all times Mr Longrigg was in a position to direct Riggcorp how it should respond to the offer. The defendants’ position, that Mr Longrigg was hostage to himself, must be rejected.
- Secondly, the defendants rely upon rule 363. This rule provides:
363 MULTIPLE DEFENDANTS
- (1)If there are 2 or more defendants, the plaintiff may make an offer to settle with any defendant, and any defendant may offer to settle with the plaintiff.
- (2)However, if defendants are alleged to be jointly or jointly and severally liable to the plaintiff and rights of contribution or indemnity may exist between the defendants, this rule applies to the offer only if—
- (a)for an offer made by the plaintiff—the offer is made to all of the defendants and is an offer to settle the claim against all the defendants; or
- (b)for an offer made to the plaintiff—
- (i)the offer is an offer to settle the plaintiff’s claim against all the defendants; and
- (ii)if the offer is made by 2 or more defendants, by the conditions of the offer the defendants who make the offer are jointly or jointly and severally liable to the plaintiff for the whole of the amount of the offer.
- The defendants’ submission, as I understand it, is as follows. The counterclaim concerned multiple defendants (who were in this case the first plaintiff and Mr Hart). The offer to settle the counterclaim was an offer being made to a plaintiff (who were in this case the first and second defendants to the claim). Rule 363(2)(b) therefore applied. As such the offer had to be one that would settle the counterclaim as it related to both the first plaintiff and Mr Hart. The defendant then appears to understand the terms of the offer as being one to settle only in relation to Mr Hart. How they have come to interpret the offer in that way is not clear to me.
- The offer set out above entailed the entirety of the counterclaim being dismissed. That is, bringing to an end all of the proceedings by the first defendant against the plaintiff and the defendant by counterclaim, Mr Hart, with only the plaintiff getting its costs of the counterclaim. The offer of the plaintiff and Mr Hart was an offer to settle the counterclaim against all defendants and complied with rule 363.
- That, however, is not the end of the matter. The defendants argue that the offer did not involve any real element of compromise by the plaintiff and is therefore outside the ambit of rule 360. An offer to settle made under the UCPR must involve an element of compromise. This is so even though the UCPR refers to an offer to ‘settle’, rather than ‘compromise’. What amounts to a compromise will vary depending on the facts of each case. The offer in relation to the claim required the defendants to pay the entire amount of the claim and the plaintiff’s costs on the District Court scale. The only aspect of compromise in the offer was to forego interest. The plaintiff did claim for interest and at one point in the trial suggested that interest should be calculated at bank rates. This suggestion was later abandoned. In the end interest was calculated to be $9,378.16. That is about 14% of the amount claimed. If that were the only consideration I would be inclined to think the amount was not trivial and the offer represented a compromise.
- But the offer also asked for an assessment of the plaintiff’s costs on the District Court scale. For the reasons set out above I have concluded that the costs should be assessed having regard to the Magistrates Court scale for claims over $50,000. The difference between the scales is not insignificant. The amounts allowed on the District Court scale exceed the relevant Magistrates Court scale by about 20%. The offer, if accepted, would have seen the plaintiff recover costs significantly greater than that to which they were otherwise entitled.
- Having regard to these matters I do not think the offer to settle the claim ‘reflected … a realistic assessment of what, in the circumstances, represented a fair and proper compromise’. It follows in my view that rule 360 is not engaged and does not require the plaintiff’s costs to be assessed on the indemnity basis. The appropriate order in the circumstances is that the defendants should pay the plaintiffs costs of the claim on the standard basis, assessed having regard to scale for Magistrates Courts found in Part 3 of Schedule 2 to the UCPR.
Another basis for standard costs?
- The defendants also argued there was another basis on which the court should exercise its discretion to allow costs only on the standard basis. They say that ‘Mr Arthur, the solicitor for the plaintiff, disclosed to the court during the trial the existence of the offer’. If such a disclosure was made it would be contrary to rule 357. The defendants have not supported their claim the offer was disclosed to the court with references to any transcript or other evidence. When facts are asserted in submissions it is generally helpful to identify the evidence that proves those facts. Searching the transcript and the file myself, I have not found anything suggesting the offer was disclosed to the court by the plaintiff’s lawyers. In the course of hearing final submissions I did discuss with the plaintiff’s counsel whether there would be a separate consideration of the costs of the claim. In this context the following exchange occurred:
HIS HONOUR: … The only other thing I wanted to ask you, Mr Gerber, related to just the costs issue generally on the claim. Are you anticipating an order for costs of the claim other than one that follows the event to be assessed on the standard basis? There’s been an offer.
MR GERBER: Yes, there will be argument, depending on the outcome - - -
HIS HONOUR: Okay.
MR GERBER: - - - as to the basis.
HIS HONOUR: All right. The reason I ask is this, is that if it’s expected that we’re going to be back at some future point having an argument about costs on the claim, then it seems to me that we will defer discussion about costs on the counterclaim to the same occasion.
- While the transcript accurately records me saying ‘There’s been an offer’, my recollection is that this was posed as question rather than a statement. It is clear that my enquiry was directed toward determining the most efficient way to deal with all issues relating to costs. If by raising this matter I have extracted from counsel an indication there had been an offer the fault lies with me and not the plaintiff’s lawyers. By mentioning the matter at all I have placed counsel in a difficult position. Any response to the questions I asked were likely to reveal, or at least hint that, there had been an offer. In these circumstances I do not consider that rule 357 has been breached.
- If I am wrong, and there is evidence that the offer was disclosed by Mr Arthur as claimed by the defendants, I do not consider this is a matter that should result in an order for costs on the standard basis. There is no suggestion the detail of the offer was made known. Bare knowledge that an offer had been made is of no great significance. It would require exceptional naivety to think that any matter goes to trial without at least one party making an offer to bring the proceedings to an early end. If there was a contravention of rule 357 it is an irregularity and, in this case, not significant enough on its own to determine the issue of costs of the claim.
Costs of the counterclaim
- The counterclaim was discontinued with leave of the court. As such rule 307(2) permits the court to ‘make the order for costs it considers appropriate’. These words give the court a wide discretion. The circumstances also raise for consideration rule 685 and the approach to costs where it has become unnecessary to continue a proceeding other than for deciding who, if anyone, should pay costs. It is helpful to set out some observations of McHugh J dealing with a similar provision in Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624-625 (footnotes omitted):
Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.
- The plaintiff submits that the counterclaim was commenced and continued in wilful disregard of known facts, was a hopeless case and prolonged the litigation unnecessarily. If such matters are established they may warrant an order for indemnity costs. Because the counterclaim was discontinued it is difficult to properly assess the plaintiff’s assertions. The pleaded misrepresentations concerned the amount of stock-in-trade usually held by the business and how much stock it needed to operate. The question of what representations were made before the contract was only lightly touched upon at the trial. But evidence about the amount of stock-in-trade held by the business in the period before and at the time of settlement was presented at the trial. It was an issue with which the parties engaged, the determination of which was by no means a foregone conclusion. The issues raised by the counterclaim were connected with the issues presented by the claim itself. Much depended upon an assessment of the evidence of Mr Hart and Mr Longrigg. In these circumstances it could not be said that the first defendant acted unreasonably in commencing and pursuing the counterclaim. The appropriate order is that there be no order as to the costs of the counterclaim.
- In reaching this conclusion I have also had regard to what the situation would have been if rule 361 was engaged in relation to the counterclaim. So far as is relevant this rule provides:
361 Costs if offer by defendant
- (1)This rule applies if—
- (a)the defendant makes an offer that is not accepted by the plaintiff and the plaintiff does not obtain an order that is more favourable to the plaintiff than the offer; and
- (b)the court is satisfied that the defendant was at all material times willing and able to carry out what was proposed in the offer.
- (2)Unless a party shows another order for costs is appropriate in the circumstances, the court must—
- (a)order the defendant to pay the plaintiff’s costs, calculated on the standard basis, up to and including the day of service of the offer; and
- (b)order the plaintiff to pay the defendant’s costs, calculated on the standard basis, after the day of service of the offer.
- The plaintiff and Mr Hart (as defendants to the counterclaim) made an offer to settle the proceeding that, if accepted, would have seen the defendants consenting to the dismissal of the counterclaim. The offer also contemplated the first defendant paying the costs of Mr Hart only, assessed on the District Court scale. If rule 361 were engaged, the starting point would be that the plaintiff and Mr Hart (as defendants to the counterclaim) should pay the first defendant’s costs of the counterclaim on the standard basis up to the day of the offer. The first defendant (as plaintiff in the counterclaim) would have to pay the plaintiff and Mr Hart’s costs on the standard basis from the date of the offer to the date the counterclaim was dismissed. The offer was made on 16 August 2019, about seven months before the trial. An application of rule 361 would see the parties share the costs of the counterclaim. This confirms in my mind the appropriate order is to have the parties bear their own costs of the counterclaim.
Costs of the application to dispense with the defendants’ signatures
- The costs of this application were reserved. Rule 698 provides that reserved costs of an application will follow the event, in this case meaning that the plaintiff and Mr Hart should get their costs of the application. The defendants say the court should exercise its discretion to make a different order and give the defendants their costs of the application because the application was premature.
- The plaintiff and Mr Hart first moved in March 2019 to have the matter set down for trial. They faced apparent resistance by the defendants. In late July 2019 the defendants set out three reasons why the matter was not ready for trial. First the defendants wanted to inspect some documents in the possession of the plaintiff. Secondly, the defendants wanted to obtain an expert accounting report. Thirdly, the defendants contemplated filing a rejoinder. By early August 2019 the documents had been inspected and by mid-September 2019 the defendants had given up on the second and third matters. The inspection of early August was said to require further investigation. After some more email jousting the documents were re-inspected on 1 October 2019. On 4 October 2019 the plaintiff and Mr Hart applied for orders that would have the matter set down for trial. Five days later, on 9 October 2019, this prompted the defendants to sign and return a request for a trial date, subject only to the finalisation of minor matters.
- In my view this history of the matter shows that it was the application that finally caused the defendants to attend to the necessary steps to have the matter listed for trial. The application was not unnecessary or premature. It was withdrawn only when the defendants signed the request for trial, thus dispensing with the need for the application. In the circumstances the defendant’s should pay the plaintiff and Mr Hart’s costs of the application on the standard basis. In accordance with my reasons dealing with the costs of the claim, the costs of the application should be assessed having regard to the scale for the Magistrates Court in Part 3 of Schedule 2 to the UCPR.
Conclusion and orders
- For the preceding reasons it is ordered that:
- The first and second defendants pay the plaintiff’s costs of the claim on the standard basis to be assessed having regard to the scale for the Magistrates Court in Part 3 of Schedule 2 to the UCPR;
- There be no order as to the costs of the counterclaim;
- The first and second defendants pay the plaintiff and Paul Edward Hart their costs of the application filed on 4 October 2019 on the standard basis to be assessed having regard to the scale for the Magistrates Court in Part 3 of Schedule 2 to the UCPR.
Asset Loan Co Pty Ltd v Mamap Pty Ltd  QDC 295.
Rule 691(3) and (4).
It is a nice point but one I need not determine. For a discussion on the matter see Mackay Taxi Holdings Ltd v Lowe  QMC 7.
Hart Industries Pty Ltd v Riggcorp Pty Ltd and Anor  QDC 214 at .
Exhibit PJA1 to the affidavit of Peter Arthur filed on 29 September 2020 (court document 34).
Jones v Millward  1 Qd R 498;  QCA 76.
Tickell v Trifleska Pty Ltd (1991) 25 NSWLR 353 at 355.
Whether or not leave was strictly necessary – see rule 304 – this was the order sought jointly by the parties.
Colgate Palmolive v Cussons (1993) 46 FCR 225; 118 ALR 248;  FCA 801 at ; Cosgrove v Johns  QCA 157 at -; Di Carlo v Dubois  QCA 225 at -.
The plaintiff and Mr Hart specifically sought their costs for the two amendments they made to their answer to the counterclaim. Because I am of the view there should be no order as to costs of the counterclaim it is unnecessary to consider if the usual positon provided for in rule 386 should be disturbed.
In my view rule 361 was not engaged because there was no order disposing of the proceedings. An ‘order’ is defined in Schedule 3 as including ‘a judgment, direction, decision or determination of a court whether final or otherwise’. Giving leave to a party to discontinue a proceeding does not come within this definition. It may be a different situation where there is a hearing on the merits and the plaintiff’s claim is dismissed – see Surfstone Pty Ltd & Anor v Morgan Consulting Engineers Pty Ltd  QSC 322.
- Published Case Name:
Hart Industries Pty Ltd v Riggcorp Pty Ltd & Anor (No 2)
- Shortened Case Name:
Hart Industries Pty Ltd v Riggcorp Pty Ltd (No 2)
 QDC 266
Cash QC DCJ
20 Oct 2020