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Thallon Mole Group Pty Ltd v Morton [No 2][2022] QDC 290

Thallon Mole Group Pty Ltd v Morton [No 2][2022] QDC 290

DISTRICT COURT OF QUEENSLAND

CITATION:

Thallon Mole Group Pty Ltd v Morton (No 2) [2022] QDC 290

PARTIES:

THALLON MOLE GROUP PTY LTD

ACN 104 671 801

(plaintiff)

v

LOUISE MORTON

(defendant)

FILE NO/S:

D2695/19

DIVISION:

Civil Trial

PROCEEDING:

Costs

ORIGINATING COURT:

Brisbane District Registry

DELIVERED ON:

15 December 2022

DELIVERED AT:

Brisbane

HEARING DATE:

6 December 2022

JUDGE:

Muir DCJ

ORDER:

Each party bears their own costs of the proceeding

CATCHWORDS:

PROCEDURE – COSTS – whether costs should follow the event – assessing the event warranting an award of costs – whether proportion of costs should be awarded to the defendant up to the date of the Calderbank Offer or at all – making of a Calderbank offer by the defendant – whether the rejection of the offer by the plaintiff was so unreasonable or imprudent so as to warrant an award of indemnity costs

LEGISLATION:

Civil Proceedings Act 2011 (Qld) s 58

Uniform Civil procedure Rules 1999 (Qld) r 681, 702, 766

CASES:

Alborn & Ors v Stephens & Ors [2010] QCA 58

Aljade & MKIC v OCBC [2004] VSC 351

Australian Conservation Foundation & Ors v Forestry Commission of Tasmania & Ors (1988) 81 ALR 166

AVS Australian Venue Security Services Pty Ltd v Criminale (No 2) [2007] NSWCA 34

Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304

Brymount Pty Ltd t/as Watson Toyota v Cummins & Anor (No 2) [2005] NSWCA 69

Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd (No 3) [2022] QSC 62

Colgate-Palmolive Company v Cussons Pty Ltd [1993] 46 FCR 225

Commonwealth of Australia v Gretton [2008] NSWCA 117

Courtney v Chalfen [2021] QCA 25

Griffith v Australian Broadcasting (No 2) [2011] NSWCA 145

Hadgelias Holdings and Waight v Seirlis & Ors [2014] QCA 235

Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435

House v The King [1936] 55 CLR 499

Interchange Corporation Ltd (in liq) v Grosvenor Hill (Qld) Pty Ltd (No 3) [2003] 1 Qd R 26

J & D Rigging Pty Ltd v Agripower Australia Ltd & Ors [2014] QCA 23

James & Ors v Surf Road Nominees Pty Ltd & Ors (No 2) [2005] NSWCA 296

Jones v Bradley (No 2) [2003] NSWCA 258 AT

Kosho Pty Ltd & Anor v Trilogy Funds Management Ltd, Trilogy Funds Management Ltd & Ors v Fujino (No 2) [2013] QSC 170

Lawes v Nominal Defendant [2007] QSC 103

Leichardt Municipal Council v Green [2004] NSWCA 341

Nerinda Pty Ltd v Redland City Council & Ors [2018] QCA 196

Oshlack v Richmond River Council [1998] HCA 11

Porter v Lachlan Shire Council (No 2) [2006] NSWCA 252

Richmond River Council v Oshlack & Ors (1996) 39 NSWLR 622

Ritter v Godfrey [1920] 2 KB 47

SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323

Speets Investment Pty Ltd v Bencol Pty Ltd (no 2) [2021] QCA 39

State of Queensland v Hayes (No 2) [2013] QSC 80 at [80].

Thallon Mole Group Pty Ltd v Morton [2022] QDC 224

Wagner & Ors v Nine Network Australia & Ors (No 2) [2019] QSC 309

Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) NSWSC 1111

COUNSEL:

C.C Heyworth-Smith KC with N.J Derrington for the plaintiff

T. Sullivan KC with A. Stumer for the defendant

SOLICITORS:

Robinson Locke Litigation Lawyers for the plaintiff

Thomson Geer for the defendant

Overview

  1. [1]
    On 7 October 2022 I delivered detailed Reasons in this proceeding and consequential Final Orders were made on 28 October 2022.[1] My Reasons outlined my then preliminary view  that the appropriate order as to costs in this proceeding is that each party bears their own costs subject to there being other factors warranting another order being made. I therefore allowed the parties the opportunity to deliver written submissions on the issue of costs.  Two sets of written submissions on costs were subsequently delivered by the parties and on 6 December 2022, I heard oral submissions about this issue. 
  2. [2]
    The plaintiff submitted that the appropriate order for costs is that each party bears their own costs of the proceeding. 
  3. [3]
    On the other hand, the defendant submitted that the appropriate order as to costs is that:
    1. (a)
      the plaintiff pay 50 percent of the defendant’s costs of the proceeding (or such other percentage determined by the Court) on the standard basis until 23 December 2020; and
    2. (b)
      the plaintiff pay the defendant’s costs of the proceeding from 23 December 2020 on the indemnity basis to be agreed or assessed.
  4. [4]
    The claim for indemnity costs is said to be underpinned or justified by a “Calderbank” offer made by the defendant dated 9 December 2020 which afforded a better result for the plaintiff than it has now obtained by the ultimate judgment of this Court.
  5. [5]
    Having considered the issue of costs fully in light of these further submission, I have determined that the appropriate order as to costs in the circumstances of this case is that each party ought to bear their own costs.
  6. [6]
    These are my reasons. 

The Proceedings and Overall Outcome

  1. [7]
    Before turning to the relevant principles governing the issue of costs it is necessary to understand the conduct of and the overall outcome of the proceedings as it was litigated and ultimately determined by me.  
  2. [8]
    By these proceedings, the plaintiff claimed the sum of  $638,634.35 comprising the sum of $381,292.76 for outstanding progress claims under the Contract plus interest at the contractual rate from 29 July 2019 compounding monthly, and $21,770.65 for quantum meruit claims plus interest pursuant to s. 58 of the Civil Proceedings Act 2011 (Qld).  It also sought the return of the retention monies (of about $220,000 plus accretions) held in trust.  Ultimately it obtained judgment for: the sum of $55,517.74 for outstanding  progress claims, plus $20,621.25 as simple interest; the sum of $2,390.85 for a variation, plus $927.19 as simple interest; and the return of the retention monies (less the sum of $12,502.25).
  3. [9]
    The defendant claimed the sum $540,428.52 as a debt due and owing (and in the alternative as damages) for incomplete and defective work, liquidated damages in the amount of $17,710 and interest pursuant to s. 58 of the Civil Proceedings Act.  She was awarded the sum of  $279,080.86 as damages for incomplete and defective work plus $28,786.08 as interest, less the sum of $220,997.66 (being the notional unpaid balance of the Contract Price) and liquidated damages in the sum of $5,100.[2] 
  4. [10]
    Overall, my findings resulted in a Final Order that the plaintiff pay the defendant the amount of $12,502.25 (being the balance of the set off between the amounts payable to the plaintiff and the amounts payable to the defendant) and that this amount be paid out of the retention monies with the balance to be released to the plaintiff. 
  5. [11]
    This result was achieved following 17 days of hearing in May, June and September 2021 and two days of oral submissions in February 2022. 
  6. [12]
    As set out in my Reasons, there were some 86  “agreed issues in dispute” between the parties. Many of these raising a myriad of other issues for the Court’s determination.  Over 600 pages of written trial submissions were received from the parties and my Reasons are 188 pages. 
  7. [13]
    The parties disagree with each about their overall success with both claiming victory. 
  8. [14]
    The plaintiff submitted that the correct analysis of my findings in the Reasons is that it claimed $660,045 plus interest (which included the return of the retentions) and that it has obtained approximately $207,000 but by contrast, the defendant claimed $538,870.65 and has received $12,502.25.  The plaintiff also submitted that it has vindicated its right to the return of almost all of the retention for works done and that this involved “real success” in the face of such monies being withheld.
  9. [15]
    On the other hand, the defendant submitted that an analysis of the resolution of the issues demonstrates that she was predominately successful on the key issues (or events).[3] She also submitted that the return of most of the retention monies to the plaintiff is not indicative of success on its part. Rather the consequence of the net resolution of the issues in dispute on both the claim and counterclaim.
  10. [16]
    As the analysis under that heading below reveals, I am not satisfied that either party can be found to be the overall or real winner in this case.

Relevant Principles as to Costs 

  1. [17]
    The starting point is that the costs of litigation are in the discretion of the court but follow the event unless the court orders otherwise or the rules provide otherwise.[4]  Unless the rules or an order of the court provide otherwise, costs are to be assessed on the standard basis.[5] 
  2. [18]
    The applicable principles guiding the exercise of this discretion are uncontroversial and can be conveniently summarised as follows:[6]
    1. (a)
      the general rule is a "starting point" that is subject to the court's discretion in light of the facts of the case;[7]
    2. (b)
      the "event" is not determined merely by reference to the judgment or order, but is to be determined by reference to the "events or issues" if there are more than one arising in the proceeding;[8]
    3. (c)
      "success" is a relative concept which must always be evaluated by reference to the events;[9]
    4. (d)
      the touchstone of the general rule, and any departure from it, is fairness – having regard to what the court considers to be the responsibility of each party for incurring the costs;[10]
    5. (e)
      where there are multiple issues which are determined in different directions as between the parties, a court might form an overall impression having regard to the significance of the issues, the way they were determined, and the amount of time and cost spent on them, and order one party to pay a proportion of another party's costs as a way to reflect fairly the parties' comparative success or failure in the outcome which was obtained;[11]
    6. (f)
      the mere fact that the successful party has been unsuccessful on some issue will not ordinarily be sufficient to depart from the general rule,[12] however, the court may depart from the general rule if the unsuccessful party succeeds on significant issues;[13]
    7. (g)
      departure from the usual order as to costs is more readily granted against a plaintiff than a defendant, as the commencing party who has the option of bringing the proceedings.[14]
  3. [19]
    It is with these principles in mind that the defendant submitted for an award of up to 50 percent of her costs of the proceeding up until the date of a Calderbank Offer which was made on 8 December 2020 and expired on 23 December – details of which are discussed under that heading below. 

Analysis

  1. [20]
    The defendant’s submission as to the appropriate overall cost order is underpinned by the proposition that she should be regarded as “the materially successful party”. Whereas despite claiming victory, the plaintiff appears to accept (by its submission that each party ought to bear their own costs) that the overall result is one of a draw.
  2. [21]
    I accept that the defendant succeeded on some key issues (such as the waterproofing, the driveway and the timber flooring) and that she was found to be entitled to terminate the Contract and to an award of damages. But it cannot be overlooked that the labyrinth of issues contained in the extensive defence and counterclaim (some of which  I described in the judgment as excruciating at times to follow) resulted in the defendant only receiving half of her claim for damages.  In this sense I do not accept as the defendant submitted that the counterclaim is properly characterised as defensive. Nor do I accept that it is a fair assessment to say that the matters on which the defendant succeeded took up the bulk of the trial. For example one of the time consuming ‘key issues” was the sliding door issue – upon which the defendant was not entirely successful on at trial – particularly in terms of the quantum claimed.   
  3. [22]
    It also cannot be overlooked in making an assessment of respective success, that the defendant maintained that as a matter of law the plaintiff was not entitled to the return of retention monies; that she did not take into account that part of her claim for damages related to work she had not paid for, that her assessment of the Reduction in the Contract Price was not accepted and that by her defence she raised a number of technical issues which she lost (for example the invalidly of the Progress Claims as they were served without form 4 notices attached).
  4. [23]
    This is clearly a case where the “event of success” is contestable having regard to the different outcomes in respect of a myriad of issues.[15] 
  5. [24]
    Costs are awarded to compensate successful parties and not to punish unsuccessful parties but remain in the overall exercise of the discretion of the Court.
  6. [25]
    Having considered the issue of costs further in light of the written submissions and the various oral arguments, I am not satisfied in all of the circumstances of this case that it is appropriate or even possible to find that either party enjoyed more of an “event of success” either on  an “issue by issue” basis or “overall outcome” basis - such that costs should follow that event. 
  7. [26]
    My overall impression having weighed up all of the competing arguments and in the exercise of my general discretion is that the appropriate order as to costs (up until the date of the Calderbank Offer) is that each party should bear their own costs. 
  8. [27]
    That is not the end of the matter. In Colgate-Palmolive Company v Cussons Pty Ltd [1993] 46 FCR 225, Sheppard J listed a number of circumstances which may warrant the exercise of the discretion to award indemnity costs.  He included “an imprudent” refusal of an offer to compromise. The defendant’s rely on such an imprudent rejection of an offer to settle as justifying an order for costs on the indemnity basis from 23 December 2020.

The Calderbank Offer

  1. [28]
    In a letter dated 9 December 2020, the defendant made an offer to settle the whole of the proceeding pursuant to the principles of Calderbank v Calderbank [1975] 3 All ER 333.[16]  This letter relevantly states as follows:

“This letter contains a without prejudice offer to your client. Our client's offer represents a genuine compromise on the part of our client and is made with the view of resolving the Proceeding on a sensible commercial basis, having regard to the issues in dispute, the quantum of the claim and the facts that both parties will incur significant additional legal costs should the Proceeding continue to hearing.

  1. Matters for consideration

1.1 To assist your client’s consideration of this offer, we note the following;

  1. (a)
    Your client has no entitlement to payment for progress claims in circumstances where the work performed is substantially defective and/or incomplete. Even if your client is entitled to payment of parts of the progress claims made the subject of the proceeding, our client was entitled to set off amounts against those progress claims and, overall, to set off its claim for rectification of defective works and liquidated damages against your client's claims in the proceeding.
  2. (b)
    Your client failed to reach practical completion. This is evident by the defective/incomplete works, failure to provide the relevant certificates, and failure to provide the required as-builts, warranties and operation and maintenance manuals. Your client has, thus far in this proceeding, focused only on its claim to progress of the physical works but ignored entirely the remaining obligations under the contract to provide inspection certificates, commissioning and other completion documents.
  3. (c)
    The waterproofing membrane installed by your client is not the specified product under the Contract, was never approved by our client nor is it fit for purpose.
  4. (d)
    With respect to the defective and incomplete work performed by your client, our client engaged a third party builder to rectify those defects and carry out the remaining work. Our client has provided records of the costs incurred for this work. We do not consider that a court would accept your client’s argument that there were no defects or that the costs incurred by our client were not reasonable or the works necessary. Further, we are confident that the court will find our client took reasonable steps to mitigate th6se costs before being incurred with a third party. The court is highly unlikely to accept the basis upon which your client contends the value of the omitted sliding doors is only $52,000, particularly in circumstances where the documents upon which your client relies do not reflect a reasonable valuation of the omitted works and those documents were only created after the dispute had arisen.
  5. (e)
    The net quantum of our client's counterclaim, taking into account the adjusted contract sum and recourse to retentions to which our client is entitled, is $327,303.38 which, as you know includes an a modest liquidated damages amount and loss of rental opportunity claim by reason of your client's failure to achieve completion within time and the resulting time taken to carry out the rectification works.
  6. (f)
    Our client has undertaken the total adjustment of monies payable under or in respect of the contract as your client did not. In addition to the judgment amount, our client would be entitled to:
    1. its legal costs of bringing the proceeding against your client; and
    2. interest on the judgment amount.

1.2 In summary, our client's amended defence and counterclaim dated 4 November 2020 now properly addresses your client's claim which we believe has poor prospects of success in a positive outcome for your client on a net basis once the claim and counterclaim are determined.

  1. Offer

1.2 Our client is, however, mindful of the significant costs reasonably incurred by the parties and the significant further costs that will be incurred by both parties should this proceeding go to trial. We are instructed that our client is willing to extend the following offer on a purely commercial basis and without any admission as to liability in respect of your client’s claim or any concessions by it in respect of its counterclaim, in an attempt to settle the disputes between our clients.

1.3 Our client is prepared to resolve the dispute with your client on the following basis:

  1. (a)
    our client agrees to release 100% of the amount currently held as the retention, being the sum of $219,442.15 (including GST) and the interest on the retention as accrued in the joint bank account in the sum of $1,560.85 as at 9 December 2020, to your client in full and final settlement of these proceedings;
  2. (b)
    each party bears its own costs of the proceeding;
  3. (c)
    your client makes payment of our client's costs in the amount of $26,855.95, awarded pursuant to the Order of Judge Porter dated 25 May 2020 and assessed in accordance with the Cost Assessor's Certificate dated 1 December 2020;
  4. (d)
    upon your client receiving the sum of $219,442.15 and interest of $1,560.85 accrued in the joint bank account as at 9 December 2020, and our client receiving the sum of $26,855.95, the parties will, within 5 business days, sign and file in the District Court of Queensland a Notice of Discontinuance, which dismisses the proceedings (being District Court of Queensland Proceeding No. 2695/19); and
  5. (e)
    the above is recorded in a Deed of Settlement on terms acceptable to the parties.

1.4 Our client makes this Offer in a genuine attempt to settle the claim and to avoid the significant costs all parties will incur in relation to running the claim to trial.

1.5 This offer is open for acceptance by your client until 4:00pm on 23 December 2020,

1.6 This offer is made on a confidential, without prejudice, no admissions basis, in accordance with the principles set out in Calderbank v Calderbank [1975] 3 All ER 333.

1.7 In the event that this offer lapses or is rejected and our client achieves a more favourable result in the proceedings, our client will rely on this letter in making an application for its costs on an indemnity basis from the date of this letter.

….“ [Emphasis added]

  1. [29]
    As is evident, the effect of the Calderbank Offer was that the retention monies with accretions be returned to the plaintiff and that otherwise each party was to bear their own costs. It follows that the result for the plaintiff after trial is obviously less favourable than this offer as in the wash it received the retention monies less the sum of $12,502.25.
  2. [30]
    The making of an offer pursuant to the principles in Calderbank v Calderbank is one circumstance in which the Court may exercise its discretion to make an order different from the general rule that costs follow the event on the standard basis.[17]  In such a case, the parties seeking costs on an indemnity basis must show that the other party acted unreasonably or imprudently by not accepting the offer made pursuant to the Calderbank Offer principles.[18]
  3. [31]
    The relative closeness of the offer which is slightly better than what the plaintiff achieved on its face at least suggests that rejection of the offer was unreasonable. The  fact however that the Calderbank Offer was very close to the Final Orders ultimately made does not necessarily mean that the offer was unreasonably or imprudently  rejected. The court must be careful not to use the benefit of hindsight in judging the response of the plaintiff at the time. It is obviously apparent that it would have been prudent for the plaintiff to have accepted the Calderbank Offer given how the case unfolded. But again, that does not necessarily mean the offer was unreasonably rejected.
  4. [32]
    The following non-exhaustive list of relevant circumstances have been identified as relevant to this assessment:[19]
    1. (a)
      the stage of the proceeding at which the offer was received;
    2. (b)
      the time allowed to the offeree to consider the offer;
    3. (c)
      the extent of the compromise offered;
    4. (d)
      the offeree’s prospects of success assessed at the date of the order;
    5. (e)
      the clarity which the terms of the offer were expressed;
    6. (f)
      whether the offer foreshadowed an application for an indemnity cost in the event of the offeree’s rejecting it.
  5. [33]
    In respect of these matters the defendant submitted that the Calderbank offer:[20]
    1. (a)
      was made some 454 days after the defendant filed and served her defence and counterclaim, which refuted the plaintiff’s entitlement to its claim and set out the defendant’s counterclaim for the defective and incomplete work;[21]
    2. (b)
      was made in clear terms and open for acceptance for 14 days;
    3. (c)
      represented a genuine compromise in that it allowed for the release of the retention sum in full to the plaintiff and for the parties to bear their own costs (a less favourable result for the defendant than the ultimate judgment);
    4. (d)
      was to resolve the entire action, including the claim and counterclaim, meaning that acceptance would not only have provided the plaintiff with the full amount of the retention sum, but also ended disputation concerning the defects the subject of the defendant’s counterclaim;
    5. (e)
      was set out in clear terms and identified the key reasons that supported the reasonableness of the offer by reference to the specific matters for consideration outlined in that letter;
    6. (f)
      expressly stated that if not accepted, the defendant would rely on the offer in making an application for indemnity costs; and
    7. (g)
      highlighted the plaintiff’s limited prospects of success as at the date of the offer having regard to the issues addressed therein, which remained central to the dispute for the course of the proceeding.
  1. [34]
    I accept that broadly speaking the Calderbank Offer did all of these things.
  1. [35]
    The plaintiff submitted that in the exercise of its discretion the court should have significant regard to the mixed success on both sides and the very minor amount by which the defendant bettered her offer.  The plaintiff also submitted that an order for indemnity costs of the proceeding from 23 December 2020 onwards would be wholly disproportionate to the defendant’s relative success in the proceeding after that date.  But in my view these matters are a distraction and not to the point of the real issue for my determination.
  2. [36]
    The discretion with respect to costs must like every other discretion be exercised taking into account all relevant considerations and ignoring all irrelevant considerations.[22]  The critical question is whether the rejection of the Calderbank Offer was unreasonable in the circumstances.  This is not a stringent test that requires the rejection to be manifestly or plainly unreasonable.  Whether conduct is reasonable is a matter of judgment and impression about which different judges might arrive at different conclusions.[23]
  1. [37]
    In Lawes v Nominal Defendant [2007] QSC 103, Byrne J helpfully analysed the way in which Calderbank Offers should be approached.  He identified specific relevant factors as including (relevantly) that the mere fact that the party making the offer obtains a judgment more favourable than the terms offered does not of itself inevitably demonstrate such special circumstances as would justify a departure from the ordinary basis of a costs assessment; and that a pertinent question is whether it appears that the party sought to be made liable for costs on an indemnity basis had imprudently or unreasonably failed to accept such an offer. 
  2. [38]
    The court must be conscious of encouraging parties to resolve matters by making offers. But the reasonableness or otherwise of the refusal to accept a Calderbank offer must be considered by reference to the situation at the time the offer was made.[24]  This requires consideration of the strength and weaknesses of each party’s case at the time the offer was made.[25] No easy task in this relatively protracted and complex litigation.
  3. [39]
    The defendant submitted that the plaintiff ought to have appreciated that it was at real risk of not succeeding at trial on a number of the key issues in dispute. These issues included the waterproofing to the external podium slab and the court’s rejection of the plaintiff’s submission about the valuation of the doors.  The difficulty in accepting the defendant’s submission about the waterproofing is three-fold:
    1. (a)
      First, the broad issue of waterproofing raised a myriad of issues – one crucial one being the waterproofing at the pool podium level was not pleaded until after the Calderbank Offer had expired.
    2. (b)
      Secondly, the resolution of the waterproofing issues required detailed factual analysis and findings together with an interpretation of the relevant contractual provisions.  It was not necessarily straight forward. And the defence of it was not without prospects; and
    3. (c)
      Thirdly,  the quantum of the defendant’s claim under this heading increased from $34,058.22 (excl. GST) at the time of the Calderbank Offer to $49,550.62 (excl. GST) at the time of trial. 
  4. [40]
    I also reject the defendant’s submission about the valuation of the doors because it   overlooks that the amount propounded by the defendant at trial as the correct adjustment for the valuation of the doors was also rejected by the court.
  5. [41]
    The plaintiff submitted that the Calderbank Offer was not unreasonably refused for the following four reasons:[26]
    1. (a)
      First, the defects schedule which occupied a significant portion of the trial did not exist until 4 November 2020 and the plaintiff was only able to prepare and serve its response on 23 December 2020 (and in the context of the number of issues raised it therefore did not have sufficient time to assess the reasonableness of the offer);
    2. (b)
      Secondly, that there was significant non-disclosure by the defendant throughout the case;
    3. (c)
      Thirdly, the underlying basis of the defects case on which the defendant succeeded was in many categories substantially different to what was pleaded  at the time of the Calderbank Offer; and
    4. (d)
      Fourthly, none of the expert evidence relied on by the defendant had been filed and served at the time of the Calderbank Offer.
  6. [42]
    I do not accept the plaintiff’s submission about points two and four above for the three reasons that follow:
    1. (a)
      First, much of the criticism of the defendant is misplaced because many of the documents subsequently disclosed were documents which were already in the possession of the plaintiff and were clearly relevant to the issues in dispute;
    2. (b)
      Secondly, whilst some of the later disclosure included photographs taken by  Hutchinson Builders during the rectification process, they could not have been disclosed earlier and prior to this, the plaintiff had been provided photographs of many of the alleged defects in the Issman Reports;[27] and
    3. (c)
      Thirdly, one of the purposes of an offer of settlement is to avoid the costs of providing disclosure and collating lay and expert evidence. That said, the plaintiff had the benefit of being in the industry in assessing the offer.
  7. [43]
    But I accept there is some force in the first and third points made by the plaintiff (as set out in paragraph 41 above) for three main reasons:
    1. (a)
      First,  the defendant was only able to deliver a pleading in response on the date the offer expired.  Much of the pleading concerning the counterclaim contained non-admissions (which were later amended to denials or occasionally admissions). So, in that sense I accept that there was insufficient time for the offer to be considered properly; 
    2. (b)
      Secondly, the articulation of the basis of many of the claims for defective work changed after the Calderbank Offer was made;
    3. (c)
      Thirdly, a number of the quantum claims on which the defendant ultimately succeeded increased from the time of the offer. For example: external waterproofing increased by some $15,000; painting and epoxy by around $10,000; electrical and communications by $12,000; Tiling and Masonry by about $5,000; and a distinct claim for residual labour was subsequently added seeking an additional sum of $73,229.40.  Although I also accept that other claims decreased. But that only further serves to show the lack of certainty and precision as to both the underlying basis of the defects claimed and the quantum of each of the claims at the time the Calderbank Offer was made.  In these circumstances I do not accept (as the defendant submitted) that the fact the plaintiff was a high-end builder meant that it was in a better position to have made a reasonable assessment of all of the issues surrounding prospects on its claim and most particularly in terms of the defence and counterclaim at that point in time. 
    4. (d)
      Fourthly, both parties chose to litigate in the way they did. The litigation was hard fought on every issue. There were genuine factual and legal issues in dispute raised on the pleadings.  This is evidenced by the analysis conducted by the defendant’s solicitor[28] and in the document marked for identification A in the costs hearing which sets out some 21 broad categories of general issues. Within these issues and as outlined earlier in these Reasons, there were ultimately some 86 issues that emerged from the pleadings. Most of the arguments on both sides were by no means hopeless and some were ultimately successful.[29]
  1. [44]
    I have considered and assessed all the arguments in the context of the position at the time the offer was made. I have determined that the appropriate exercise of my discretion is that I am not satisfied that it was possible for the plaintiff to have made a proper assessment of the strengths and weaknesses of its case and the case against it, particularly given the number of factual and legal issues in dispute between the parties by the time the Calderbank Offer expired. There were too many unknown exigencies and issues in dispute in this relatively complex case.  In the circumstances of this case I therefore find that the plaintiff’s failure to accept or rejection of the Calderbank Offer was not unreasonable.
  2. [45]
    The making of the Calderbank Offer also does not change my overall assessment of the appropriate award of costs in this case (as discussed under the heading “The Proceedings and Overall Outcome” above).
  3. [46]
    I therefore find that there is no other basis for the defendant to be awarded costs on the indemnity (or any other basis) from 23 December 2020.

Orders

  1. [47]
    I therefore order that each party bears their own costs of the proceeding.

Footnotes

[1] Thallon Mole Group Pty Ltd v Morton [2022] QDC 224.

[2]  Being the sum of $16,100 awarded to the defendant for liquidated damages less the amount of $11,000 allowed for the plaintiff’s liquidated damages claim.

[3]  In support of this submission the defendant relied on any analysis undertaken by her solicitor as exhibited to AJK-1 of Mr Andrew James Kelly filed at hearing on 5 December 2022. A further annexure marked A was handed up as an aid during the oral hearing. 

[4] Uniform Civil procedure Rules 1999 (Qld) (UCPR) r 681.

[5]  UCPR rule 702.

[6]  A useful summary of the general principles is also found in the recent Court of Appeal decision of  Speets Investment Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39 at [14]-[17] (per Bond J, as his Honour then was, with whom Sofronoff P and Callaghan J agreed).

[7] Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) NSWSC 1111 at [10] (Brereton J).

[8] Interchange Corporation Ltd (in liq) v Grosvenor Hill (Qld) Pty Ltd (No 3) [2003] 1 Qd R 26, 60-61 (Macpherson JA).  See also Alborn & Ors v Stephens & Ors [2010] QCA 58 at [8] (per Muir JA with whom Holmes JA and Daubney J agreed)

[9]  As illustrated by Applegarth J in Kosho Pty Ltd & Anor v Trilogy Funds Management Ltd, Trilogy Funds Management Ltd & Ors v Fujino (No 2) [2013] QSC 170 at [5]-[8].

[10] Commonwealth of Australia v Gretton [2008] NSWCA 117 at [121] (Hodgson JA), Oshlack v Richmond River Council [1998] HCA 11 at [67] (McHugh J).

[11] Speets Investment Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39 at [17].

[12] Courtney v Chalfen [2021] QCA 25 at [5] (per Morrison JA, with whom Philippides and Mullins JJA agreed), Speets Investment Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39 at [16].

[13] James & Ors v Surf Road Nominees Pty Ltd & Ors (No 2) [2005] NSWCA 296 at [31]-[36]; Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] (Beazley, Ipp and Basten JJA).

[14] Richmond River Council v Oshlack & Ors (1996) 39 NSWLR 622, 637 (Cole JA).  This decision was reversed in Oschlack v Richmond River Council [1998] HCA 11, but the point referenced was not doubted by the High Court.  See also: Ritter v Goldfrey [1920] 2 KB 47, 53 (Lord Sterndale MR), Australian Conservation Foundation & Ors v Forestry Commission of Tasmania & Ors (1988) 81 ALR 166, 169, Griffith v Australian Broadcasting (No 2) [2011] NSWCA 145 at [16].

[15]  See the observations made by the Court of Appeal in Nerinda Pty Ltd v Redland City Council & Ors [2018] QCA 196 at [2] & [6]. Although these observations were given in the context of UCPR r 766 (1)(d) and in the context of costs following an appeal, this general observation remains apposite to the present case in my respectful view.

[16]  See the Kelly Affidavit at [7], Exhibit AJK-2.

[17] State of Queensland v Hayes (No 2) [2013] QSC 80 at [80].

[18] J & D Rigging Pty Ltd v Agripower Australia Ltd & Ors [2014] QCA 23 at [5]-[6] (Holmes JA, Applegarth and Boddice JJ), cited in Wagner & Ors v Nine Network Australia & Ors (No 2) [2019] QSC 309 at [40].

[19]  Ibid; Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 at [25] as also relevantly discussed by Bond J more recently in SHA Premier Constructions Pty Ltd v Niclin Constructions Pty Ltd (No 2) [2020] QSC 323 at [8]-[14] citing J and D Rigging at [5]-[6]; Hadgelias Holdings and Waight v Seirlis [2014] QCA 325 at [11]-[12] and also Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435.

[20] Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 at [25]; J & D Rigging at [6]; Hadgelias Holdings and Waight v Seirlis & Ors [2014] QCA 235 at [11].

[21]  Although as the plaintiff submitted and I accept as discussed later in these Reasons - the detailed defects or first iteration of Appendix 3 [the Scott Schedule] was not filed until 4 November 2020 – just prior to the Calderbank Offer being served. 

[22]  See House v The King [1936] 55 CLR 499 at 505.

[23] Aljade & MKIC v OCBC [2004] VSC 351 per Redlick J as discussed by the Victorian Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435.

[24] Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd (No 3) [2022] QSC 62 at [51] (Williams J), citing Giles JA in SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]; AVS Australian Venue Security Services Pty Ltd v Criminale (No 2) [2007] NSWCA 34 at [7]; Porter v Lachlan Shire Council (No 2) [2006] NSWCA 252 at [6]; Jones v Bradley (No 2) [2003] NSWCA 258 at [8], Leichardt Municipal Council v Green [2004] NSWCA 341 at [19]; Brymount Pty Ltd t/as Watson Toyota v Cummins & Anor (No 2) [2005] NSWCA 69 at [14].

[25] Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd (No 3) [2022] QSC 62 at [52].

[26]  Plaintiff’s submission on costs dated 10 November 2022 at [15]-[18].

[27]  Although as my primary judgment revealed – many of the defects said to be outstanding in the Issman Reports were not established by the defendant – and were accepted to have been rectified or completed by the time the plaintiff had been excluded from the site.  

[28]  Affidavit of Mr Andrew James Kelly filed at hearing on 5 December 2022. 

[29]  See to the observations of Dorney QC, DCJ in Exel Drilling Pty Ltd v GLB Quarrying & Logistics Pty Ltd (No 2) [2013] QDC 263 at [19] & [20].

Close

Editorial Notes

  • Published Case Name:

    Thallon Mole Group Pty Ltd v Morton (No 2)

  • Shortened Case Name:

    Thallon Mole Group Pty Ltd v Morton [No 2]

  • MNC:

    [2022] QDC 290

  • Court:

    QDC

  • Judge(s):

    Muir DCJ

  • Date:

    15 Dec 2022

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2022] QDC 29015 Dec 2022-
Notice of Appeal FiledFile Number: CA353/2312 Jan 2023Notice of appeal filed.

Appeal Status

Appeal Pending

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