Car Mojo Pty Ltd v Lin No 2[2021] QDC 208

DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   In this matter I have delivered reasons for judgment in the matter and indicated I would hear further submissions about the form of the order, and about costs.

Background

2. [2]
   The plaintiff succeeded in its claim for misleading and deceptive conduct, for the reasons set out in the principal judgment.
3. [3]
   The claim for damages, up to 31/1/2020, was set out in paragraph 40 of the third amended statement of claim as follows:

   1. (a)
      Loss for YEJ 2017 $427,250
   2. (b)
      Loss for YEJ 2018 $118,584
   3. (c)
      Loss for YEJ 2019 $52,860
   4. (d)
      Loss for the period up to 31/1/2020 $53,803

Total $652,497

4. [4]
   Thereafter the plaintiff was also entitled to interest, pursuant to the loan agreement it had. Up to 7 February 2021, this amounted to the further sum of $121,173 meaning damages up to that date amounted to $773,610, a sum in excess of this court’s jurisdictional limit.
5. [5]
   In order to appreciate the arguments concerning the plaintiff’s claim for indemnity costs, and the defendant’s opposing that claim, it is necessary to understand that interest charged on the loan and referred to in the principal judgment was significant, comprising the following up to 31/1/2020;

   1. (a)
      YEJ 2017 $86,304
   2. (b)
      YEJ 2018 $46,222
   3. (c)
      YEJ 2019 $52,597
   4. (d)
      Period 1/7/19 to 31/1/2020 $39,036

Total $146,489

6. [6]
   Thus, up to 31/1/2020 losses, apart from interest, were $506,008. Of this, $418,616 was incurred in YEJ 2017. The bulk of this related to loss of the purchase price paid for the business, after deduction of money received for the sale of the equipment, a loss of some $250,000.

Interest

7. [7]
   The plaintiff seeks interest pursuant to s 58 of the Civil Proceedings Act in the sum of $38,320.50 calculated and in accordance with the Queensland Courts Interest Calculator on damages other than its claims for interest.
8. [8]
   That calculation is not opposed by the defendant’s counsel’s written submissions in response. I will therefore allow interest in the sum of $38,320.50.

Costs

9. [9]
   The plaintiff submits that costs to be assessed on an indemnity basis are appropriate as the defendant did not accept the plaintiff’s offer made  in accordance with the rules, in the sum of $395,435. That offer was made on 20 November 2017. Details of that offer are contained in an affidavit of Michael Joseph Crane sworn on 10 August 2021.
10. [10]
    The defendant opposes the plaintiff being awarded costs on an indemnity basis, submitting costs should be allowed only on a party and party basis.
11. [11]
    The defendant submits that;

    1. (a)
       The plaintiff entered into the loan agreement from her partner Ms Marshall on 7 April 2017
    2. (b)
       Proceedings were instituted in October 2017
    3. (c)
       The original statement of claim did not plead that loan (described as a related entity loan in the defendant’s submission) or seek damages in respect of that loan. That related entity loan was pleaded for the first time only in a further amended statement of claim of 28 February 2020.
    4. (d)
       The related entity loan was varied on 19 March 2020.
    5. (e)
       The related entity loan agreement was only disclosed by the plaintiff in its third list of documents of 8 May 2020
    6. (f)
       The related entity loan and interest were said in paragraph 148 of the principal judgment to be the overwhelming bulk of the damages to be awarded.
12. [12]
    That is so, since the loan in the sum of $328,000 was used to purchase the business and to meet further expenses. The loss on the sale of the business after deducting the money received for the sale of assets in the sum of $250,000, and the interest components on the loan were set out previously.
13. [13]
    The defendant’s counsel submits that indemnity costs ought not be awarded because;

1. (1)
   At the time of the offer the defendant was not able to appraise the true extend of the plaintiff’s claim for damages. In particular this was so because it had not been informed of the related entity loan which was at a significantly higher interest rate than the plaintiff’s original bank loan.

2. (2)
   The related entity loan agreement was not disclosed until May 2020, some two and a half years after the offer and the plaintiff  failed to conduct the litigation expeditiously secure in the knowledge that the defendant would potentially be liable for interest at the higher rates agreed to in the related entity loan agreement.

14. [14]
    In submissions in reply the plaintiff submits the defendant’s approach should be rejected because;

1. No legal authority is cited in support of the defendant’s contention;
2. The defendant’s argument is “flawed in logic and fact” and asserts that “the amount of the plaintiff’s claim since the offer was made has only decreased.”;
3. If the amount of interest is deducted from the judgment amount, the sum awarded still exceeds the offer;
4. There is no evidence the plaintiff was willing and able to carry out the proposed offer.

15. [15]
    I accept that, the third of these matters is correct, for the reasons set out previously.
16. [16]
    The relevant rule relating to offers made under the Uniform Civil Procedures Rules^[1](‘UCPR’)  as the plaintiff’s was, is r 360(1) of the UCPR which provides:

“360 Costs if offer by plaintiff

1. (1)
   If—

1. (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

2. (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.”

17. [17]
    The last of the defendant’s submission is, I suspect, flawed.  A brief consideration of the terms of the offer suggests that there was little difficulty in the plaintiff carrying out the offer. In the circumstances, hereafter set out, I do not however, think it necessary to conclude that matter.
18. [18]
    I do think there is considerable strength in the defendant’s submissions set out in paragraph 13 hereof.  It seems to me the plaintiff has considerably delayed the prosecution of the claim, contrary to the obligation cast on all litigants by reason of r 5 UCPR to proceed expeditiously.  Such delay has exposed the defendant to significant additional interest of which he was unaware until disclosure of the loan agreement only on 8 May 2020.  If informed more expeditiously of the related entity loan agreement of 7 April 2017, the defendant might have obtained orders to ensure the plaintiff proceeded far more expeditiously than it did.
19. [19]
    That is, in my view, a very compelling reason why I conclude an order for standard basis costs only is appropriate in the circumstances. The fact that the plaintiff recovered loss, excluding interest in excess of the offer does, not mean a standard costs order is not appropriate. The plaintiff’s delay has caused the defendant significant additional financial exposure. 
20. [20]
    I might add that I do not understand the plaintiff’s counsel’s argument that “the amount of the plaintiff’s claim since the offer was made has only decreased”.
21. [21]
    It appears to me that it has increased each year, as set out previously.
22. [22]
    In the circumstances, I conclude that an order for standard basis costs only is appropriate.

Freezing order

23. [23]
    Freezing orders were obtained from another Judge of this Court on 8 March 2021.  Subsequently they were ordered, after a contested hearing, to remain in place until judgment.  They have been subsequently varied by consent, I gather.
24. [24]
    Those orders were designed to prevent the frustration of the court’s processes and protect the plaintiff’s ability to satisfy any judgment it might obtain.
25. [25]
    The defendant’s counsel’s written submissions suggest the plaintiffs’ position is adequately protected by the judgment which it can enforce. 
26. [26]
    It is also submitted that the injunction interferes with the defendant’s ability to comply with orders of the Family Court and submits that continuing the orders would mean the parties will be compelled to appear before the Family Court to allow that Court to determine which order has greater priority.
27. [27]
    There is however  no material before me concerning the freezing orders or the Family Court proceedings, or how they interact.
28. [28]
    In the circumstances I am not satisfied the orders should be interfered with.  That is, particularly so as the parties can always come before the Court to vary or amend the orders to meet particular circumstances, supported by affidavit material.

Final Orders

29. [29]
    In the circumstances I order:

1. Judgement for the plaintiff against the defendant in the sum of $750,000 together with $43,157.60 interest (being a total of $793,157.60);
2. The sum of $35,000 together with accretions thereon and held in the Nelson Shum Solicitors trust account is to be released to the plaintiff forthwith;
3. The defendant’s counterclaim is dismissed;
4. The defendant is to pay the plaintiff’s costs of the proceeding to be assessed on a standard basis;
5. The freezing orders made 8 March 2021, and varied by consent, are to remain in place until such time as the defendant has satisfied the entire judgment together with any post judgment interest, and costs orders, or until further order of the Court.