KDV-Sport Pty Ltd v Lighthouse Industries (Qld) Pty Ltd
[2022] QDC 238
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- Unreported Judgment
- KDV-Sport Pty Ltd v Lighthouse Industries (Qld) Pty Ltd[2022] QDC 238
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KDV-Sport Pty Ltd v Lighthouse Industries (Qld) Pty Ltd[2022] QDC 238
KDV-Sport Pty Ltd v Lighthouse Industries (Qld) Pty Ltd[2022] QDC 238
DISTRICT COURT OF QUEENSLAND
CITATION: | KDV-Sport Pty Ltd v Lighthouse Industries (Qld) Pty Ltd & another [2022] QDC 238 |
PARTIES: | KDV-SPORT PTY LTD ACN 149 913 333 (Plaintiff) v LIGHTHOUSE INDUSTRIES (QLD) PTY LTD ACN 130 672 909 (First Defendant) And NICHOLAS DAVID CRESSWELL (Second Defendant) |
FILE NO: | 1367/21 |
DIVISION: | Civil |
PROCEEDING: | Trial |
ORIGINATING COURT: | Brisbane District Court |
DELIVERED ON: | 20 October 2022 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 22, 23 & 24 August 2022 |
JUDGE: | Porter KC DCJ |
ORDER: |
|
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – Where the plaintiff’s claim for damages for money owing under a Loan Deed was successful – Where the plaintiff seeks cost of the whole of the proceeding on the indemnity basis – Where the plaintiff seeks costs to be fixed – Where the defendant did not provide submissions that another order is appropriate. |
COUNSEL: | S. Armitage for the Plaintiff No appearance by the defendants |
SOLICITORS: | McInnes Wilson Lawyers for the Plaintiff |
Summary
- [1]On 24 August 2022, I delivered ex tempore reasons for judgment in this matter: KDV-Sport Pty Ltd v Lighthouse Industries (Qld) Pty Ltd [2022] QDC 199. These reasons should be read with those. Defined terms retain the same meanings as in that judgment.
- [2]KDV succeeded entirely on its claims against the defendants. It now seeks orders for interest and costs. I directed KDV to file and serve material and submissions, which it has done. Mr Cresswell appeared in person and, with leave, for Lighthouse. He has filed nothing in response to KDV’s material and submissions. His material was due to be filed on 18 August 2022. On 28 September 2022, my Associate notified the parties I intended to proceed on the material before me. Nothing further has been heard from Mr Cresswell. I therefore deal with the remaining issues on the material filed by KDV.
Costs
- [3]KDV seeks indemnity costs for the whole proceedings, or alternatively from 11 March 2022. The alternative date is the date of making of an offer which KDV characterises as a Calderbank offer.
- [4]KDV relies on an offer to settle made under Chapter 9 Part 5 UCPR. That offer was in the following terms:
- Within 7 days of the Plaintiff receiving from the First and Second Defendants a written Notice of Acceptance of this offer, the First and Second Defendants shall pay the Plaintiff the total sum of $197,542.33 (Settlement Sum), comprising the following:
- (a)the amount of $150,000.00 in full and final satisfaction of all claims in this proceeding other than the Plaintiff’s costs; and
- (b)the Plaintiff’s costs in the amount of $47,542.33 (exclusive of the GST).
- The First and Second Defendants are jointly and severally liable to the Plaintiff for payment of the Settlement Sum.
- Within 3 days of the Plaintiff receiving payment in cleared funds of the Settlement Sum from the First and Second Defendants, the Plaintiff shall provide the First and Second Defendants with a signed Notice of Discontinuance to discontinue this proceeding against the First and Second Defendants.
- Within 3 days of the First and Second Defendants receiving the signed Notice of Discontinuance from the Plaintiff, the First and Second Defendants shall sign and return that notice to the Plaintiff for filing in the Court Registry as soon as practicable thereafter.
- This offer is open for acceptance for fourteen (14) days after the date of service hereof, after which time it shall automatically lapse.
- Acceptance of this offer may be effected by serving a written Notice of Acceptance on the undersigned solicitors for the Plaintiff.
- [5]That offer attracts the operation of Rule 360 UCPR which provides:
- (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
- (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.
- (2)If the plaintiff makes more than 1 offer satisfying subrule (1), the first of those offers is taken to be the only offer for this rule.
- [6]Despite the anomalous treatment of offers by plaintiffs in that Rule which provides for indemnity costs from the commencement of proceedings regardless of when the offer was made as the default position, that remains the law. There is no reason to doubt that the conditions in Rule 360(1) and (2) were met in respect of that offer, not least because the principal sum for which judgment was obtained alone exceeded the total offer to a material extent. The plaintiff is therefore entitled to costs of the proceeding on an indemnity basis unless the defendant shows another order is appropriate. The defendants have put on no material nor any submission to show another order is appropriate. KDV is therefore entitled under that Rule to an order for costs of the proceeding on an indemnity basis.
- [7]This conclusion makes it unnecessary to consider the other grounds relied upon by KDV to sustain its claim for costs on an indemnity basis. However, I briefly comment on them.
- [8]First, I refer to the Calderbank offer made by KDV. It provided:
The Plaintiff offers to settle this matter on the following basis:
- the First and Second Defendant pay the Plaintiff the amount of $210,000 (Payment), within 28 days of the acceptance of this offer;
- the Payment is in full and final satisfaction of all claims in the Proceedings;
- the First and Second Defendant are jointly and severally liable for the Payment;
- the parties each bear their own costs of the Proceeding;
- if the Payment is not paid within the period set out in 1, and the breach is not remedied within 14 days, the Plaintiff is at liberty to apply for Summary Judgment in the Proceeding for the claimed amount in the proceedings, interest thereon, and costs against each of the First and Second Defendant and the First and Second Defendant consent to the order for Summary Judgment being made and will not oppose it;
- the Plaintiff will discontinue the proceedings in full against the First Defendant and the Second Defendant within 14 days after the Payment being received.
This offer is a substantial discount on the full value of the claim and does not include any amount for interest or costs.
It would be unreasonable to refuse this offer in circumstances where the offer is a substantial discount, disclosure has been made, and the parties are aware of the real issues in dispute.
This offer is open for 7 days from the date of this letter, after which time it will lapse.
In the event our client is successful and recovers more than the amount of the offer, we advise of our intention to put this letter before the Court and make an application for indemnity costs.
- [9]In my view, at the time this offer was made, the defendants were (or should have been) in a position to assess their prospects of success and consider the offer. While it was not a generous one in terms of the extent of compromise, the element of compromise remained substantial, bearing in mind the likelihood of recovering interest and costs on a successful judgment.
- [10]Further, the claim by KDV was very much an all or nothing claim and was supported by the express words of the Loan Deed. Even allowing for the uncertainty surrounding the defence, the argument that the Loan Deed was not intended to take effect according to its terms was always one facing real difficulties. There is no suggestion in my mind that they were at some disadvantage in assessing their prospects that the time of the offer. The defendants effectively took the risk on that defence and lost.
- [11]Finally, I also take into account in respect of the defence of Mr Cresswell personally involving denial that he had signed the guarantee was a very weak defence and should have been known to him to be a weak defence, at the least for the first, fourth and fifth reasons identified in paragraphs [34], [37] and [38] of the reasons.
- [12]There is nothing else about the offer which suggests it was reasonable for the defendants to reject it, bearing in mind the considerations which ordinarily inform the assessment of a Calderbank offer.[1] Obviously no submission was advanced by the defendants on the point. But for the offer under Rule 360, I would have awarded indemnity costs from the date of expiry of the period for acceptance of this offer.
- [13]Second, KDV argued that the defence of the proceedings was so without merit as to make their defence an abuse of process attracting the Court’s power to order indemnity costs: see most recently Hookey v Whitelaw [2021] QCA 213. There is a credible contention that the denial of the signature on the guarantee by Mr Cresswell was so unmeritorious as to make that part of his defence an abuse of process. That was particularly so once the expert evidence was served, though that part of the trial was a relatively minor issue compared with the other issues which arose. However, I do not accept that the defence based on the alleged representations and agreement that the Loan Deed was not enforceable reached the necessary standard of hopelessness. The defence was shambolic and inconsistent but at heart, it involved an assertion that certain conversations occurred which ultimately were not established at trial. I am not persuaded that the case itself was fabricatied, as I made clear in my judgment. On balance, I would not have awarded indemnity costs on the basis that the defences overall were an abuse of process.
- [14]Third, KDV relied on express contractual provisions said to justify indemnity costs if claimed under the contract and the guarantee. No such claim was advanced in the proceedings, though I accept that the existence of such provisions can inform the exercise of the discretion to award costs even if they are not part of the plaintiff’s case at trial. I do not think that on its proper construction, the clause in the Loan Deed relied upon, sustains a claim for costs of the proceedings on the indemnity basis. The clause relied upon (clause 4.3) is oddly drafted and covers, in effect, only costs incurred as a result of payment other than on the due date. I am not persuaded that this clause applies where a proceeding is brought to recover the loan where no payment at all has been made or is made in the proceedings. The clause relied upon in the guarantee (clause 11) does cover costs of proceedings of this kind. It would have sustained, in my view, the exercise of the discretion to order the costs of the proceedings against the guarantor on an indemnity basis and I would have been inclined to so order if it had been necessary.
Assessment of costs
- [15]Rule 687 UCPR provides:
- (1)If, under these rules or an order of the court, a party is entitled to costs, the costs are to be assessed costs.
- (2)However, instead of assessed costs, the court may order a party to pay to another party—
- a specified part or percentage of assessed costs; or
- assessed costs to or from a specified stage of the proceeding; or
- an amount for costs fixed by the court; or
- an amount for costs to be decided in the way the court directs.
- (1)
- [16]KDV relies on Rule 687(2)(c) and seeks that I fix the costs. KDV has provided evidence of the costs it claims were incurred. It claims costs calculated on an indemnity basis at $114,055.36. This appears to represent a claim for the whole of the costs incurred as reflecting costs which would be assessed as recoverable on an indemnity basis.
- [17]Courts ought to take a robust approach to exercising the power conferred by Rule 687(2)(c). The assessment process can be expensive, time consuming and add disproportionately to the costs of proceedings, especially proceedings involving relatively modest sums. In the commercial context, this case was one which involved a modest sum. That observation is not a criticism of the assessment regime nor of the practitioners that work in that field, it is just an inevitable consequence in some cases of the processes required for a fair determination of disputed costs issues. In that context, the principles in Rule 5(1) and (2) suggest that a robust approach will frequently be justified.
- [18]However, it is important that a robust approach does not lead to material injustice in a particular case. The entitlement to costs is confined by well established principles, both where costs are awarded on a standard basis and on an indemnity basis. The Court must be sensitive to avoid the awarding of costs which go beyond that entitlement. That sensitivity, and the risk of injustice, will increase the larger the sum of costs claimed. The shorthand approach which might be justified for the costs of a short application might not be justified for the costs of a long trial.
- [19]I am reluctant to accept KDV’s submission that I ought to award costs on an indemnity basis for the amount sought.
- [20]First, there is a body of authority which informs the approach which Courts have taken to the application of Rule 687(2)(c): see [r 687.1 Civil Procedure Queensland Looseleaf Service]. KDV’s submissions did not address any of that authority.
- [21]Second, in fixing costs on an indemnity basis, I should have regard to Rule 702(2) which provides:
- (1)Unless these rules or an order of the court provides otherwise, a costs assessor must assess costs on the standard basis.
- (1)
Note—
- Costs on the standard basis were previously party and party costs—see rule 743S (Old basis for taxing costs equates to new basis for assessing costs).
- (2)When assessing costs on the standard basis, a costs assessor must allow all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed.
- [22]There is no direct evidence that the sum claimed by KDV meets the statutory test stated in that rule. For example, there is no evidence from a solicitor with experience in cost assessment that the amounts claimed, and the work done meets the statutory test. I assume I am asked to infer that from the overall sum claimed, the work identified, my own experience in costs assessment (which frankly is limited) and my own involvement in the trial.
- [23]On the other hand:
- (a)Given the matters identified in the previous sentence, I do recognise that the amount claimed is not, at first blush, excessive for costs of preparation and conduct of a trial which ran over 2 days;
- (b)The claim and the costs sought are not particularly large, at least given their commercial character;
- (c)The work done reflected in the various particularised invoices does appear to relate to the work for the conduct of the proceedings and the sum sought does not seem remarkable given the character of the proceedings; and
- (d)The defendants were given ample opportunity to respond to the claim for costs advanced by KDV and chose not to do so.
- (a)
- [24]I infer from its approach that KDV is keen to avoid the inconvenience and expense of an assessment process. That is also a consideration. On balance, it seems to me that the correct course in this particular case is to fix costs as requested by KDV, but to adopt a conservative approach to doing so to minimise the risk of injustice to the defendants, despite their choice not to involve themselves in this process.
- [25]I therefore order the amount of costs payable to KDV by the defendants be fixed at $95,000 inclusive of GST.
Interest
- [26]Interest is claimed by KDV under under section 58 Civil Proceedings Act 2011. The Court frequently adopts the published default judgment interest rate to assess interest under that section, though the Court has a discretion as to whether to award interest and if so at what rate and for what period. KDV forthrightly concedes that that the rate under the Loan Deed, the interest sum to the date of judgment would be less than the interest calculated on the default judgment rate. It seems to me that as KDV expressly accepted that rate and did not provide for a higher default rate in the Loan Deed, I ought to adopt the Loan Deed rate.
- [27]There is no challenge to the calculation of interest on that Loan Deed rate by KDV at $20,712.62. I award interest in that amount.
Footnotes
[1] See the considerations identified in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No2) (2005) 13 VR 435 at [25]