Laurel Star Pty Ltd v Babstock Pty Ltd [No 2]
[2021] QDC 1
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- Unreported Judgment
- Appeal Determined (QCA)
- Laurel Star Pty Ltd v Babstock Pty Ltd [No 2][2021] QDC 1
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Laurel Star Pty Ltd v Babstock Pty Ltd [No 2][2021] QDC 1
Laurel Star Pty Ltd v Babstock Pty Ltd [No 2][2021] QDC 1
DISTRICT COURT OF QUEENSLAND
CITATION: | Laurel Star Pty Ltd v Babstock Pty Ltd (No 2) [2021] QDC 1 |
PARTIES: | LAUREL STAR PTY LTD ACN 624 444 864 as trustee for the Alan and Dorothy Marburg Family Trust (first plaintiff) AND DOROTHY ANN MARBURG (second plaintiff) v BABSTOCK PTY LTD ACN 010 443 124 as trustee for The Kenman Real Estate Unit Trust ABN 60 266 220 872 (first defendant) AND WAG PROPERTY MANAGEMENT PTY LTD ACN 136 174 242 as trustee for The WAG Unit Trust (second defendant) |
FILE NO/S: | 2326/18 |
DIVISION: | Civil |
PROCEEDING: | Trial |
DELIVERED ON: | 19 January 2021 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 11 to 15 May 2020 Submissions on costs received on 14 December 2020 |
JUDGE: | Barlow QC DCJ |
ORDER: | The defendants pay the plaintiffs’ costs of the proceeding, including any reserved costs, on the standard basis. |
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS – INFORMAL OFFERS AND CALDERBANK LETTERS – UNREASONABLE REFUSAL OF OFFER – two informal offers were made by the plaintiffs – some parts of the plaintiffs’ claim were not pressed or not determined by the court – whether the defendants’ rejection of those offers, on either occasion, was unreasonable – whether costs should be ordered on the indemnity basis PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW EVENT – PARTIAL SUCCESS – plaintiffs did not press part of their claim – substantial part of the trial was occupied by a claim that the court found it was unnecessary to consider – deemed admissions that were beneficial to the defendants were withdrawn by the plaintiffs during the trial – plaintiffs did not respond to a notice to admit facts, some of which were ultimately proven at trial – whether a global reduction on the plaintiffs’ entitlement to costs should be ordered Uniform Civil Procedure Rules 1999, r 189 Calderbank v Calderbank [1973] 3 WLR 586, cited Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435, applied |
COUNSEL: | AJH Morris QC for the plaintiffs BWJ Kidston for the defendants |
SOLICITORS: | Sarinas Legal for the plaintiffs Carter Capner Law for the defendants |
- [1]On 3 December 2020, I gave judgment for the plaintiffs on their claim and dismissed the defendants’ counterclaim.[1] I reserved the question of costs and have subsequently received written submissions on that question.
- [2]The plaintiffs submit that the defendants should be ordered to pay their costs of the proceeding. Relying on one offer that they made under the rules and two informal offers that they made subsequently,[2] they submit that those costs should be on the indemnity basis, as least from the date of one of the offers.
- [3]The defendants submit that they should be ordered to pay 60% of the plaintiffs’ costs of the proceeding, on the standard basis. They also submit that, as the amount of the judgment in the plaintiffs’ favour was within the jurisdiction of the Magistrates Court, I should order that those costs be assessed on that court’s scale.
- [4]The offer made by the plaintiffs under the rules was that the defendants pay them an amount greater, in dollar terms, than the sum for which I gave judgment, together with costs on the standard basis. Although the sum sought was described, in the offer, as the amount of the deposits paid, it was in fact $4,500 more than the total of the deposits. The offer was made at a time when the plaintiffs sought damages in addition to the return of the deposits. Notwithstanding the reference to the amount of the deposits, the offer was not so clear that the judgment can be said to be no less favourable than the offer. I do not consider it appropriate, in the circumstances, to order indemnity costs in the light of this offer.
- [5]The first of the informal offers was made about nine months later than the formal offer. By that letter, the plaintiffs sought a refund of the correct amount comprising the deposits that the first plaintiff had paid, with costs on the standard basis, and the counterclaim to be dismissed. The plaintiffs’ solicitors made it clear that, if not accepted, the letter would be relied on in seeking indemnity costs “should a better result be achieved after the hearing of the matter.” By the judgment, the plaintiffs did not achieve a better result, but they did achieve the same result that they had sought by that offer.
- [6]As the defendants’ counsel noted in his submission on costs, the principles to be applied in consideration of costs consequent on the making and rejection of a Calderbank offer were set out by Margaret Wilson J in Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd (No 2) [2011] QSC 156 at [9], where her Honour quoted at length from – and applied – the principles set out in the judgment of the Victorian Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435, at [21] to [25]. I respectfully adopt the principles there set out. In particular, the critical question is whether the losing party’s rejection of the offer was unreasonable in the circumstances prevailing at the time the offer was made.
- [7]The defendants accept that the effect of the offer was more favourable than the judgment, but they submit that their rejection of the offer was not unreasonable, for a number of reasons. Those reasons include that, as the plaintiffs effectively later abandoned many parts of their damages then claimed, the acceptance of the offer would effectively have amounted to capitulation on that part of the claim on which the plaintiffs were ultimately successful. Also, the plaintiffs did not succeed in many other parts of their claims, or the court found it unnecessary to decide them. Finally, the contracts relied on by the plaintiffs were poorly drafted, making it reasonable for the defendants to maintain their defences and their counterclaim and therefore to reject the offer.
- [8]The facts that the plaintiffs later did not press, or did not succeed in, and that the court did not find it necessary to consider, some of their claims, is not relevant to consideration of the effect of this offer. I must consider whether its rejection was unreasonable in the circumstances at that time. In the circumstances, the offer was a clear proposal to compromise the entirety of the plaintiffs’ claims and to resolve the counterclaim. It was not an “offer” that, in effect, sought the defendants’ capitulation.
- [9]As is apparent from my principal reasons for judgment, the determination of the parties’ claims was not easy. The contracts were, as the defendants’ counsel submitted, poorly drafted and open to substantial argument as to their proper construction. The defendants’ arguments as to their construction and their reliance on the construction for which they contended was not, in my view, unreasonable. In the circumstances, nor was their rejection of the plaintiffs’ offer unreasonable. I do not consider that its rejection justifies an award of costs on the indemnity basis.
- [10]The last offer was made about nine months after the second and about two months before the trial of the proceeding. By that offer, the plaintiffs proposed that the defendants pay them a global sum of $100,000 with each party bearing its own costs. That offer is not expressly stated to be a Calderbank offer, but it was said to be without prejudice save as to costs. That wording is consistent with it being a Calderbank offer. The defendants accept that the offer was more favourable to the plaintiffs than the consequences of the judgment (presumably taking into account any costs that I now award the plaintiffs). But they contend that they did not act unreasonably in not accepting it, for the same reasons as apply to the second offer.
- [11]My comments above concerning the second offer apply equally to this offer. It does not justify an award of indemnity costs.
- [12]The defendants finally contend that the plaintiffs should only have 60% of their costs because they did not press, or failed in, some of their claims, a substantial part of the trial was occupied by an alternative claim for damages for misleading or deceptive conduct that the court did not find it necessary to consider, the defendants had the benefit of some deemed admissions on the pleadings until the plaintiffs obtained leave to withdraw them during the trial and the defendants had served a notice to admit facts that the plaintiffs did not admit but which, the defendants contend, they ultimately proved at trial. They submit that I should order a global reduction of the plaintiffs’ entitlement to costs due to those matters.
- [13]I have not analysed the consequences of the deemed admissions, nor each of the facts not admitted that the defendants contend they proved at trial. I do not consider that the fact that I did not find it necessary to consider the alternative claim should result in the plaintiffs not having their costs of that part of their claim. It is inappropriate to speculate on whether they would have succeeded on that claim if I had considered it. To the extent, if any, that the defendants incurred costs in proving facts that the plaintiffs refused to admit, the defendants would ordinarily be entitled to their costs of proving those facts unless the court otherwise orders.[3] It is debatable whether some of the alleged facts were proved, especially where I found it unnecessary to consider some. It would be unreasonably complicated and expensive to consider separately the costs of proving each of those facts. I consider that they should be dealt with as part of the costs of the proceeding overall.
- [14]In all the circumstances, I do not consider it appropriate to make an overall global reduction to an order in the plaintiffs’ favour that the defendants pay their costs of the proceeding.
- [15]While the judgment was for a sum well within the jurisdiction of the Magistrates Court, the plaintiffs also defended the defendants’ counterclaim for substantially more than that jurisdiction. I do not consider it appropriate to limit the costs to that scale.
- [16]If there were any reserved costs, neither party made any separate submissions about how they should be dealt with. They should follow the overall determination of the proceeding.
- [17]The appropriate order is that the defendants pay the plaintiffs’ costs of the proceeding (including the counterclaim) on the standard basis.