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Nel v Octoclay Pty Ltd (formerly Dwyer-Corporation Pty Ltd t/as Dwyer Quality Homes)[2020] QDC 282

Nel v Octoclay Pty Ltd (formerly Dwyer-Corporation Pty Ltd t/as Dwyer Quality Homes)[2020] QDC 282

DISTRICT COURT OF QUEENSLAND

CITATION:

Nel v Octoclay Pty Ltd (formerly Dwyer-Corporation Pty Ltd t/as Dwyer Quality Homes) & Anor [2020] QDC 282

PARTIES:

MARIA JOANNA NEL

(applicant/plaintiff)

v

OCTOCLAY PTY LTD (ACN 101 839 139) (FORMERLY DWYER-CORPORATION PTY LTD TRADING AS DWYER QUALITY HOMES)

(first respondent/defendant)

and

WAYNE GEOFFREY DWYER
(second respondent)

FILE NO/S:

D151/18

DIVISION:

Commercial

PROCEEDING:

Application for Costs

ORIGINATING COURT:

District Court of Queensland, at Brisbane

DELIVERED ON:

12 November 2020

DELIVERED AT:

Brisbane

HEARING DATE:

29 October 2020

JUDGE:

R S Jones, DCJ

ORDER:

  1. The first and second respondents are to pay plaintiff’s costs of the substantive proceedings on an indemnity basis.
  2. The first and second respondents are to pay the applicant’s costs of the cost proceedings on the standard basis.

CATCHWORDS:

COSTS – where applicant entered into a building contract with the first respondent – where applicant sued the first respondent in negligence – where applicant successful after a trial

COSTS ON AN INDEMNITY BASIS where applicant seeks costs against the first respondent on an indemnity basis – where applicant made an offer to settle pursuant to chapter 9, Part 5 of the Uniform Civil Procedure Rules – where respondent did not accept the offer – where the offer was materially more favourable than the judgment – whether the respondent can show that costs on an indemnity basis are not appropriate in all the circumstances

WHERE COSTS SOUGHT AGAINST A NON-PARTY – where second respondent a director of first respondent – where second respondent represented the first respondent at the trial – where trading name of the first respondent transferred to a newly created corporate entity – where second respondent initially that company’s sole director and CEO – where second respondent subsequently resigned as a director and secretary of that company – where defendant company rendered a man of straw.

Legislation

Civil Liability Act 2003 (Qld)

Uniform Civil Procedure Rules 1999 (Qld)

Cases

Arawak Holdings Pty Ltd v King Tide Company Pty Ltd [2018] QCA 148

Binary Pty Ltd v RAMS Financial Group Pty Ltd [2019] QSC 280

Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No. 10) [2009] FCA 498

Davies v Fay (1995) 1 Qd R 509

Duffy v Hepron Pty Ltd [2007] QSC 106

FPM Constructions v Council of the City of Blue Mountains [2005] NSWCA 340

Knight v F P Special Assets Ltd (1992) CLR 174

Oshlack v Richmond River Council (1998) 193 CLR 72

Plante v James [2011] QCA 109

Roworth and Roworth v Mamet & Anor [2010] QSC 283

The Beach Retreat Pty Ltd v Moolooba Marina Ltd (2009) 2 Qd R 356

COUNSEL:

Mr P Travis for the applicant/plaintiff

Mr C Jennings for the first respondent/defendant and second respondent

SOLICITORS:

Axia Litigation Lawyers for the applicant/plaintiff

Sajen Legal for the first and second respondents

Introduction

  1. [1]
    This proceeding is concerned with an application brought by Ms M J Nel (the applicant) for costs orders on an indemnity basis against Octoclay Pty Ltd (the first respondent) and Mr W G Dwyer (the second respondent).  For the reasons set out below, the orders of the court are:
  1. The first and second respondents are to pay plaintiff’s costs of the substantive proceedings on an indemnity basis.
  1. The first and second respondents are to pay the applicant’s costs of the cost proceedings on the standard basis.

Background

  1. [2]
    At all material times the applicant was the registered proprietor of land situated in Queensland who entered into a building contract with the first respondent.  At all material times the second respondent was the director and managing director of the first respondent.
  2. [3]
    After the first respondent had constructed a house on the land owned by the applicant it was discovered that the roof pitch had been installed at the incorrect pitch angle.  As a consequence, the dwelling suffered severe water penetration and consequential structural damage.  Despite several attempts on the part of the first respondent to rectify the problems they continued and, upon negotiations between the applicant and the first respondent failing to reach a satisfactory outcome, the applicant commenced legal proceedings.
  3. [4]
    In the substantive proceedings before this court, damages were assessed in the sum of $1,200,000 together with consequential orders or, in the alternative, in the sum of $500,246.98 together with consequential orders.  The substantial proceeding was dealt with by this court on 21 August 2020 where judgment was entered in favour of the plaintiff in the sum of $500,246.98.  The court further ordered that it would hear from the parties as to any consequential orders.

The situation of the first respondent

  1. [5]
    In the written submissions filed on behalf of the applicant it is asserted as follows:[1]

“On 3 June 2020, the plaintiff made an offer to settle under Chapter 9, Part 5 of the UCPR.

The offer was that the plaintiff would settle the plaintiff’s claim for $290,000 with no order as to costs.  The defendant did not accept the offer.

The offer was far more favourable than the judgment that was entered and required nothing of the plaintiff, other than acceptance of the money in exchange for dismissal of the proceeding.

Accordingly, under r 360 of the UCPR, 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 cannot show any circumstances suggesting that another order is appropriate in the circumstances.  To the contrary, the circumstances suggest the maintenance of hopeless defences through to trial, a consideration that independently warrants an order that costs be assessed on an indemnity basis.”

  1. [6]
    Before going on to deal with the first respondent’s position, I should first deal with a number of objections taken to paragraphs set out in the affidavit of Ms Jennifer Raphael relied on by the applicant.  Insofar as paragraphs 33, 34, 35, 36, 38 and 39 are concerned, I uphold the objections.  Ms Raphael’s views and opinions about the matters to which she refers in those paragraphs ought be ignored.  As to the objection taken to paragraph 51, I also uphold the objection.  If reliance was intended to be placed on the hearsay evidence referred to therein, it could have been dealt with by appropriate transcript references.  Turning then paragraph 58, that paragraph ought also be struck out as being clearly hearsay evidence.  Finally, in respect of paragraph 60, it suffers from the same fate.  I would add that in respect of both paragraphs 58 and 60 their contents, even if admissible, would be of little if any probative value in any event.  Significantly, putting aside those objections just disposed of, no issue was taken with the balance of the affidavit of Ms Raphael, including the matters of fact addressed therein.
  2. [7]
    It is not disputed that the applicant is entitled to favourable cost orders against the first respondent.  It is however argued that costs ought not be ordered on an indemnity basis or, if they are, only from the date of the settlement offer.
  3. [8]
    The primary position in this regard though is that the offer to settle was not properly made within Part 5 of chapter 9 of the Uniform Civil Procedure Rules 1999 (Qld) (‘UCPR’).  The offer filed on behalf of the applicant was said to be pursuant to the relevant part of the UCPR and relevantly stated:[2]

FORMAL OFFER TO SETTLE

TAKE NOTICE that the abovementioned Plaintiff hereby offers to settle the claim on the basis that the Defendant pay to the Plaintiff the sum of Two Hundred and Ninety Thousand Dollars ($290,000) with no orders as to costs in satisfaction of the plaintiff’s claim.

This offer is made in accordance with the provisions of Chapter 9, Part 5 of the Uniform Civil Procedure Rules.

This offer is open for acceptance for fourteen (14) days after the date of service hereof but shall then lapse.

Acceptance of this Offer may be effected by serving a written Notice of Acceptance on the undersigned solicitors for the Plaintiff.

The offer herein is for the payment of …

  1. [9]
    As best as I can understand the position of the first respondent, the offer was not one which fell within the relevant provisions of the UCPR because:[3]

“The offer to settle … is for payment of:

  1. (1)
    $290,000 within 14 days of acceptance; and
  1. (2)
    ‘No order as to costs’

Whilst it may be implicit in the phrase ‘no order as to costs’ that the plaintiff proposed that each party was to bear its own costs of the proceedings, the offer required that further clarification on the issue of costs was not, consequentially, reasonably capable of immediate acceptance by the defendant …” (emphasis added)

  1. [10]
    The phrase “no order as to costs”, does more than imply that each party was to bear their own costs of the proceedings.  It is well established that the phrase actually means that each party must bear its own costs for that proceeding or step in the proceeding.  No further clarification of the type contended for was required.
  2. [11]
    Pursuant to r 360 of the UCPR, if 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, 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.”
  3. [12]
    It is not disputed that, in the circumstances of this case, the pre-requisites in r 360(1)(a) and (b) of the UCPR have been met.  Instead it is submitted on behalf of the first respondent:[4]

“Notwithstanding satisfaction of the pre-requisites in sub-rule 360(1)(a) and (b) of the UCPR, the Court retains a discretion on the issue of the assessment of costs where ‘the defendant shows another order for costs is appropriate in the circumstances’.  In Duffy v Hepron Pty Ltd, Chesterman J observed that: ([13])[5]

‘A plaintiff who wishes to take advantage of the generosity of UCPR 360 should make an offer as promptly as is reasonable in the circumstances.  There is, I think, an element of unfairness in visiting on a defendant the entire costs of an action on the indemnity basis where an offer is made on the eve of trial and the offer subsequently turns out to have been a good one.  In my opinion depending, of course, on the circumstances of each case, justice would be better served by ordering indemnity costs only from the date of the offer.’”

  1. [13]
    Rule 360 of the UCPR contains no express limitation of the type contended for on behalf of the first respondent.  That said, in Davies v Fay[6] McKenzie J also limited the timeframe from which costs on an indemnity basis should run.  The reasoning behind His Honour’s approach to the costs argument in Davies bears no material resemblance to the situation here.  In Roworth and Roworth v Mamet & Anor,[7]  Justice Douglas was asked to apply that dictum in the circumstances of the proceeding before him.  However, after referring to a number of clearly unsatisfactory elements associated with the defendant’s conduct, ordered that the discretion ought be exercised in the “manner provided by the rule” and, accordingly, ordered that the defendant was to pay the plaintiff’s costs including reserved costs on the indemnity basis.
  2. [14]
    In my view, the offer to settle made on behalf of the applicant needs also to be considered in the light of how Mr Travis, counsel for the applicant, described the case of the first respondent as being the “maintenance of hopeless defences through to trial”.  In my respectful view, that is a correct description.  In the substantive judgment there are numerous references to the second respondent accepting that the first respondent had failed to give any proper consideration to the design and construction of the roof pitch.  Indeed, when asked to clarify the case for the first respondent, the second respondent said to the effect “everyone makes mistakes”.[8]
  3. [15]
    Additionally, the second respondent on behalf of the first respondent raised, without any real basis, a number of other potential causes for the damage suffered by the applicant.  None of which were even remotely capable of being accepted by the court.[9]  On balance, I have reached the view that the defendant has not shown that another order is more appropriate in the circumstances. 
  4. [16]
    The primary case for the applicant was based on the evidence of a property valuer whose evidence was rejected in its entirety in the substantive proceedings.[10]  As a consequence, damages were awarded not in the sum of $750,000.00, being the monetary limit of the jurisdiction of this court, but instead in an amount significantly lower.  During the course of submissions I raised with Mr Jennings, counsel for the respondents whether that ought be a matter to be taken into account by way of some reduction in the final determination as to costs.  His response was, that in the event that I were to find that the settlement offer was one that fell within Chapter 9 of the UCPR, given the manner in which the trial was conducted, he could not sensibly press for any discount on that basis. 
  5. [17]
    It was submitted however, that any order as to costs on an indemnity basis should only run from the filing of the offer to settle.  Ordinarily that submission might have some merit.  However, in this case there are a number of features that lead me to conclude that any orders as to costs should not be limited to after the date of the offer.  The evidence in the substantive proceedings made it clear that from no later than early 2018, the first respondent was or ought to have been aware that the water penetration problem was the work of its unworkmanlike design and construction.[11]  Despite that, as is discussed below, it took a callous and calculated course of action designed to compromise the applicant.  And, when that failed, filed what could only be described as a spurious defence maintained through to trial.
  6. [18]
    In the circumstances I can find no reasonable basis for limiting the extent of the cost orders in the manner contended for on behalf of the first respondent. 

The liability of the second respondent

  1. [19]
    Before going on to determine the question of costs insofar as the second respondent is concerned, it is important to bear in mind the observation of McHugh J in Oshlack v Richmond River Council:[12]

“… Costs are not awarded to punish an unsuccessful party.  The primary purpose of an award of costs is to indemnify the successful party.  If the litigation had not been brought, or defended, by the unsuccessful party, the successful party would not have incurred the expense which it did.  As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.”

  1. [20]
    In the written submissions on behalf of the second respondent it is said:[13]

“The plaintiff seeks a costs order against Mr Dwyer because:

  1. (a)
    the defendant is insolvent or a person of straw;
  1. (b)
    Mr Dwyer has an interest in the subject proceedings;
  1. (c)
    Mr Dwyer controlled the defendant;
  1. (d)
    Mr Dwyer delayed the court’s processes and ran up unnecessary costs in the proceeding.”
  1. [21]
    No issue was taken with points (a) and (c), but it was said that “those matters alone or collectively do not justify a costs order against Mr Dwyer”.  That can be readily accepted and indeed the applicant does not say otherwise.
  2. [22]
    In respect of point (d), while I am not prepared to proceed on the basis that the second respondent was responsible for unreasonable delay, there can be no doubt that, for the reasons expressed in the substantive judgement and herein, he put the applicant to unnecessary expense by running a defence in respect of liability that was clearly doomed to fail. 
  3. [23]
    It was asserted in the written submissions on behalf of the second respondent that:[14]

“There is nothing in this case that makes it sufficiently rare or exceptional such as to justify a costs order against Mr Dwyer.  He caused the defendant to defend the proceeding on multiple grounds, including that the damages claimed was excessive, consistent with his fiduciary obligations to the defendant as its sole director.  That defence was vindicated, albeit only in part, by the court’s finding on damages.” (emphasis added)

  1. [24]
    The reference to “rare” or “exceptional” circumstances stems from a litany of cases relied on to support the view that non-party costs orders could only be made in such circumstances.[15]  In this context it was submitted on behalf of the second respondent that:

Whilst the categories of case [sic] in which a non-party costs order may be made are not closed, in FPM Constructions v Council of the City of Blue Mountains[16] the court said:

Nevertheless, the requirements of justice should not be allowed to expand an exception to the general rule, so as to undermine the rule itself.  What is significant from a survey of the cases in which orders have been made against non-parties is that they tend to satisfy at least some, if not a majority, of the following criteria:

(a) the unsuccessful party to the proceeding was the moving party and not the defendant;

(b) the source of funds for the litigation was the non-party or its principal;

(c) the conduct of the litigation was unreasonable or improper;

(d) the non-party, or its principal, had an interest (not necessarily financial) which was equal to or greater than that of the party or, if financial, was a substantial interest; and

(e) the unsuccessful party was insolvent or could otherwise be described as a person of straw.’”

  1. [25]
    FPM Constructions was cited with approval by Morrison JA in Arawak Holdings Pty Ltd v King Tide Company Pty Ltd.[17]  The list of matters that might be considered relevant when deciding whether to make non-party orders as to costs was expanded on in Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No. 10):[18]
  • “There must be a real link between the non-party and the proceedings, which is material to the issues of costs.
  • The mere fact that a person may benefit from litigation will not, without more, suffice to justify an award of costs.
  • An order for costs may be appropriate – provided the interests of justice so require – where the party to litigation is an insolvent person or a man of straw, the non-party has played an active part in the conduct of the litigation and the non-party has an interest in the subject of the litigation.
  • Regard will be had to whether the non-party had been warned, or the non-party could have been joined as a party or applied to join earlier in the proceedings and thereby obtained the protection of the rules of the court.
  • It can be appropriate to exercise the power against a person who may be characterised as no more than a real party to the litigation in critical and important respects, albeit not the only such party.
  • An order for costs may be appropriate where a non-party causes a party to bring or defend proceedings for his or her own financial benefit, either to gain the fruits of the litigation or to preserve assets in which the person has an interest.
  • Where a non-party has maintained or financed an action, or caused an action, or has some management of the action, a costs order may be appropriate.  This may be the case where, for example, the nominal plaintiff is mentally incompetent and the non-party has a substantial interest in the outcome.
  • Conversely, the courts have declined to order costs against a non-party:
  • Simply because the non-parties were directors of the plaintiff company and had caused the plaintiff to commerce and maintain proceedings in circumstances where they ought to have known that, if the proceedings were unsuccessful, it was unlikely that the plaintiff could meet a costs order:
  • Where the non-party had not been separately represented at the hearing of the primary proceedings.
  • Simply because the non-party is a legal expense insurer.” (citations deleted).
  1. [26]
    As has already been identified, the first respondent readily accepts that it could now be properly described as a person of straw and that the second respondent controlled that corporate entity.  By reference to the substantive reasons, it is also inescapable that the litigation was unreasonable in the sense that the case run by the second respondent on behalf of the first respondent was hopeless and doomed to fail.
  2. [27]
    On behalf of the respondents, I was referred to two cases in particular where it was observed that non-party orders as to costs would “necessarily be rare”[19] or, only arise in circumstances so exceptional as to displace the general rule that it is the parties who bear the costs.[20]
  3. [28]
    In Knight v FP Special Assets Ltd[21] Mason CJ and Deane observed:

“The conclusion that the wide words of O. 91, r. 1 should not be read down so as to preclude jurisdiction to make an order for costs against a non-party does not, of course, mean that a judge has an unfettered discretion to make any order that he or she chooses.  The wide jurisdiction conferred by the rule “must be exercised judicially and in accordance with general legal principles pertaining to the law of costs”, to take up the words of Lambert J.A. in Oasis Hotel Ltd v Zurich Insurance Co. (77).

Obviously, the prima facie general principle is that an order for costs is only made against a party to the litigation.  As our discuss of the earlier authorities indicates, there are, however, a variety of circumstances in which consideration of justice may, in accordance with general principles relating to awards of costs, support an order for costs against a non-party.  Thus, for example, there are several long-established categories of case in which equity recognized that it may be appropriate for such an order to be made.

For our part, we consider it appropriate to recognise a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.” (emphasis added, footnotes deleted).

  1. [29]
    In my respectful opinion, non-party orders as to costs ought not be confined to “rare” or “exceptional” class of cases, unless meaning only as an exception to the general rule.  During submissions it seemed that this approach was, at the end of the day, uncontroversial. 
  2. [30]
    In respect of company directors, it has been said that “there is no reason why the presence of a corporate veil should preclude a cost order against a controlling director who stands to benefit from the proceedings.”[22]  In Arawak Holdings Pty Ltd Morrison JA was concerned with the situation where the respondent was successful at trial involving the applicant who was a corporation.  The respondent was also successful in the court below in obtaining a non-party costs order against the sole director of the applicant.  In reaching the conclusion that he did, in addition to a number of the criteria or principles already referred to above, his Honour observed that it was uncontroversial that:[23]

“Where proceedings are initiated and controlled by a person who, although not a party to the proceedings, has a direct personal financial interest in the result, it would rarely be just for such a person pursuing his own interests, to be able to do so with no risk to himself should the proceedings fail or be discontinued.” (Footnotes deleted – emphasis added)

  1. [31]
    His Honour went on to conclude that the company director in that case did fall within the category of cases warranting non-party costs orders.  [24]

“… that is, he played an active part in the conduct of the litigation, he was the sole director of King Tide, he was a director of the firm of solicitors that acted for King Tide for much of the litigation, he was the author of much of the correspondence by King Tide, he had an interest in the subject of the litigation as a beneficiary under the relevant trust, and had admitted he was the sole person ‘behind’ King Tide. (Footnotes deleted)

  1. [32]
    As has already been identified it is uncontroversial that the first respondent is insolvent and could properly be described as “a person of straw” and that the second respondent was in control of the actions of the first respondent.  Additionally, it is also clear that, as was the case in Arawak Holdings, he was the person behind significant correspondence concerning the litigation. 
  2. [33]
    Proceedings were commenced against the first respondent on 16 October 2018.  On 16 July 2019, the second responded communicated to the solicitors acting on behalf of the applicant the following piece of advice:[25]

“Octoclay Pty Ltd (formerly Dwyer Corporation Pty Ltd):

  • only constructed a couple of houses last financial year
  • is currently not trading, and will never trade again
  • does not have a builders licence anymore as this has been cancelled
  • has no property, real estate, motor vehicles, or any other tangible assets
  • has no money in the bank and is about to close its bank account
  • sold the trading name of Dwyer Quality Homes to another company for $1
  • has liabilities in excess of its assets and its net position is approximately $100-

In light of this you may wish to take further instruction from your client as to how you are wanting to handle this matter. (emphasis added)

  1. [34]
    The only sensible inference that can be drawn from that correspondence is that it was intended to pressure the applicant to compromise her litigation because, to do otherwise, would result in her not only being able to recover any damages that might be awarded but also any associated costs of the proceedings.
  2. [35]
    That the trading name of Dwyer Quality Homes was sold to another company for $1 must also be seen in the light of the following: 
    1. (a)
      It is uncontroversial that the Company Licence Search of Dwyer Homes Pty Ltd recorded that prior to the cancellation of its building licence, the first respondent was generally operating as a Category 3 licensed builder having a maximum revenue of between $12,000,001 and $30,000,000.[26] 
    2. (b)
      It is also uncontroversial that between the financial years 2003/2004 to 2018/2019 the first respondent had completed some 774 building projects.  In this context, during the course of the substantive proceeding, the second respondent advised the court that he was a very experienced builder and that he and/or other entities he had had association with, had built somewhere in the order of 3,500 homes.
  3. [36]
    Tellingly in my view, in the financial year 2016/2017 the first respondent completed 83 jobs, in the financial year 2017/2018, 60 jobs but in the financial year 2018/2019 only 7 jobs were completed.  Inevitably, the newly formed company has a close association with the second respondent.  Dwyer Homes Pty Ltd was registered on or about 14 May 2018.  It not only had the same principle place of business as the first respondent but, as of 26 November 2018, the second respondent was the sole director and secretary of that company.  Further, by 12 February 2019, all shares were controlled by the family of the second respondent or corporate entities under his control. 
  4. [37]
    Following the provocative correspondence referred to above, solicitors for the applicant respondent on the same day said:

“Thank you for your correspondence.

You are the sole director and secretary of Octoclay Pty Ltd (formerly Dwyer Corporation Pty Ltd).  You are also the sole director and secretary and nominee of Dwyer Homes Pty Ltd.

If Octoclay is wound up the QBCC will classify you as an excluded individual and cancel your building license because you were the director/secretary/influential person for Octoclay.  The QBCC will also classify Dwyer Homes Pty Ltd as an excluded company and cancel its building license because you are the director/secretary/influential person and nominee for Dwyer Homes.

Furthermore any liquidator appointed to Octoclay will investigate the financial records of Octoclay and potentially claw back any uncommercial transactions.

In light of this you may want to consider how you would like to handle this matter.”

  1. [38]
    Putting to one side the accuracy of potential ramifications for the second respondent, there can be no doubt it caused him to react quickly.  On or about 29 July 2019, a form was lodged with ASIC notifying that the second respondent was no longer acting as director and secretary of Dwyer Homes Pty Ltd and that one Alexander Wayne Dwyer was now acting exclusively in those capacities.  Alexander Dwyer is the son of the second respondent.  Notwithstanding that prima facie shift in the control of that company, the second respondent still holds himself out as its CEO. 
  2. [39]
    On balance, I am able to conformably conclude that the second respondent has actively pursued a callous and deliberate course of conduct intended to deny the applicant the opportunity of reaping the benefits of her litigation commenced against the first respondent. 
  1. [40]
    It is difficult to pin point exactly what interest the second respondent had in pursuing the defence of the first respondent, as hopeless as it was.  It is true that the second respondent and his wife between them held all of the A class and Ordinary class shares in the company.  But once that company had divested itself of all of its assets, it could have abandoned its defence or not filed a defence at all without being any worse off financially.  The risk of the first respondent being wound up was created when the assets of that company were transferred to the newly formed company, in circumstances where it was all but inevitable that it was going to incur a substantial judgment debt. 
  2. [41]
    On behalf of the applicant, it was submitted that the second respondent’s interest in the proceeding was to avoid having his builders licence cancelled as a result of the first respondent being wound up.  However, as already discussed, that risk had already come into existence sometime prior to 16 July 2019.
  3. [42]
    That said, the only inference that can be drawn from the conduct of the second respondent was that he did in fact have an interest, as misconceived as it might have been, in either the actual outcome of the proceedings or delaying that outcome.  Once the first respondent divested itself of its assets the second respondent in all likelihood became the source of its funding.  This included the funding of proceedings to have a default judgment set aside.  The funding to retain lawyers to prepare the companies defence filed 16 August 2019 and, according to the second respondent, the retention of lawyers to consider the prospects of a successful appeal against the decision in the substantive proceeding. 
  4. [43]
    There was a submission that any order as to costs concerning the second respondent ought be limited to those costs incurred after the first respondent was warned about an application for costs on an indemnity basis and the second respondent, about the risk of non-party cost orders. That occurred on 3 June 2020. Having regard to the conduct of the second respondent since the proceedings commenced, I do not consider that any discount is warranted on that, or any other basis.
  5. [44]
    Given the serious consequence of the relief sought, particularly in respect of the second respondent, the respondents were entitled to be heard. The application in respect of costs was dealt with in an expeditious manner and, while costs should follow the event, I can see no reasons why those costs sought should not be assessed on the standard basis.
  6. [45]
    In all of the circumstances, I am comfortably satisfied that not only should cost orders be made against the second respondent, but also that they should be made on an indemnity basis.  For the reasons given the orders of the court are:
  1. The first and second respondents are to pay the plaintiff’s costs of the substantive proceedings on an indemnity basis.
  2. The first and second respondents are to pay the costs of the applicant’s costs of the cost proceedings on the standard basis.

Footnotes

[1]  At paras 33-37.

[2]  Affidavit of Ms Raphael at p 250.

[3]  Written submissions at para [3].

[4]  At para [4].

[5]  [2007] QSC 106.

[6]  (1995) 1 Qd R 509.

[7]  [2010] QSC 283 at [37], [38] and [39].

[8]  [2020] QDC 200 at [8], [9], [10] and [23].

[9]  In this regard at one stage Mr Dwyer went so far as to say that he agreed with 95 % of the case being presented by the plaintiff. T1-84, l 19.

[10]  Refer to paras [51]-[55].

[11]  At paras [20]-[21]. 

[12]  (1998) 193 CLR 72 at [67].

[13]  At para [17].

[14]  At para [24].

[15] Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No.10) [2009] FCA 498.  Plante v James [2011] QCA 109.  PM Works Pty Ltd v Management Services Australia Pty Ltd [2018] NSWCA 168.  The Beach Retreat Pty Ltd v Mooloolaba Marina Ltd (2009) Qd R 356.

[16]  [2005] NSWCA 340 per Basten JA (with whom Beasley and Giles JJA agreed).

[17]  [2018] QCA 148 at [13].

[18]  [2009] FCA 498 at [20]

[19] Taylor v Pace Developments Ltd [1991] BCC 406 at [409].

[20] Vanguard 2017 Pty Ltd v Modena Properties Pty Ltd (No. 2) [2018 FCA 1461 at [49].

[21]  (1992) 174 CLR 178 at pp 192-193.

[22] National Mutual Life Association of Australia Ltd v Chris Poulson Insurance Agencies Pty Ltd (1998) 8 Tas R 123 at 135 per Slicer J.

[23]  At para 13(e): refer also to para [20] herein.

[24]  At para [28].

[25]  Exhibit JLR-7 to the affidavit of Ms Raphael at p 51.

[26]  Paragraphs 7 and 8 of Raphael affidavit.

Close

Editorial Notes

  • Published Case Name:

    Nel v Octoclay Pty Ltd (formerly Dwyer-Corporation Pty Ltd t/as Dwyer Quality Homes) & Anor

  • Shortened Case Name:

    Nel v Octoclay Pty Ltd (formerly Dwyer-Corporation Pty Ltd t/as Dwyer Quality Homes)

  • MNC:

    [2020] QDC 282

  • Court:

    QDC

  • Judge(s):

    R S Jones, DCJ

  • Date:

    12 Nov 2020

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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