Noosa Cruises Pty Ltd v Saltwater Noosa Pty Ltd
[2023] QDC 19
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- Unreported Judgment
- Noosa Cruises Pty Ltd v Saltwater Noosa Pty Ltd[2023] QDC 19
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Noosa Cruises Pty Ltd v Saltwater Noosa Pty Ltd[2023] QDC 19
Noosa Cruises Pty Ltd v Saltwater Noosa Pty Ltd[2023] QDC 19
DISTRICT COURT OF QUEENSLAND
CITATION: | Noosa Cruises Pty Ltd v Saltwater Noosa Pty Ltd & Ors [2023] QDC 19 |
PARTIES: | NOOSA CRUISES PTY LTD ABN 64 064 084 886 (Plaintiff) v SALTWATER NOOSA PTY LTD AS TRUSTEE FOR THE SALTWATER UNIT TRUST ACN 608 797 315 (First Defendant) And TD MARINE SURVEYORS AND NAVAL ARCHITECTS ACN 107 755 144 (Second Defendant) And TERRY R DAVIS (Third Defendant) |
FILE NO: | 926/20 |
DIVISION: | Civil |
PROCEEDING: | Trial |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 17 February 2023 |
DELIVERED AT: | District Court at Brisbane |
HEARING DATE: | Written submissions filed on 9 December 2022, 27 December 2022 and 28 December 2022 |
JUDGE: | Loury KC DCJ |
ORDER: |
|
CATCHWORDS: | COSTS – Indemnity costs – whether costs should be ordered on the indemnity basis – where there is a contract between the parties providing an obligation to pay legal costs – whether conduct of the first defendant unreasonable |
CASES: | Calderbank v Calderbank [1975] 3 All ER 333 Clarence Property Corporation Limited v Sentinel Robina Office Pty Ltd [2019] QSC 13 Noosa Cruises Pty Ltd v Saltwater Noosa Pty Ltd & Ors [2022] QDC 278 |
COUNSEL: | G Forde for the Plaintiff A Marinac (solicitor) for the First Defendant M de Waard for the Second and Third Defendants |
SOLICITORS: | Holland & Holland Solicitors for the Plaintiff Pacific Maritime Lawyers for the First Defendant Mills Oakley for the Second and Third Defendants |
Introduction
- [1]On 9 December 2022 I ordered that there be judgement for the plaintiff on its claim. I further ordered that the first defendant’s counterclaim be dismissed and its claim against the second and third defendants be dismissed.[1]
- [2]The first defendant accepts that an offer made by the second and third defendants to all parties on 11 May 2022 should be treated as a Calderbank[2] offer. The parties have reached agreement on all questions of costs other than whether the first defendant should be ordered to pay the costs of the plaintiff incurred prior to 11 May 2022 on the standard or indemnity basis.
- [3]The plaintiff seeks an order that the first defendant pay all its costs on an indemnity basis given the conduct of the first defendant.
- [4]The plaintiff pleaded that it be awarded costs on an indemnity basis and pleaded section 16.1 of the Bill of Sale which provides as follows:
COSTS AND STAMP DUTY
16.1 The Grantor shall pay to the Grantee upon demand:
- (a)…
- (b)…
- (c)the Grantee’s legal costs and disbursements of and incidental to the enforcement or attempted enforcement by the Grantee of any of the Grantee’s rights, powers or remedies under this deed.
- [5]The first defendant pleaded in its defence that it was not in breach of the contract of sale and the Bill of Sale because of pre-contractual representations and breaches of express and implied terms of the contract. In its counterclaim the first defendant pleaded that the plaintiff was in breach of the contract and that such breaches caused loss and damage to the first defendant.
- [6]The plaintiff argues that as the first defendant was claiming an entitlement to relief from the plaintiff’s claim due to matters raised in the counterclaim, for the plaintiff to enforce its rights under the Bill of Sale, the plaintiff had to successfully defend the claims made by the first defendant in the defence and counterclaim. Those costs fall within the scope of “legal costs and disbursements of and incidental to the enforcement or attempted enforcement by the Grantee of any of the grantee’s rights, powers or remedies under this deed.” Accordingly, it is contended, costs should be awarded on an indemnity basis.
- [7]The first defendant concedes that effect should be given to this provision in the Bill of Sale, however argues that the provision is silent on the how those costs should be calculated. The plaintiff relies upon Clarence Property Corporation Limited v Sentinel Robina Office Pty Ltd[3] in which Jackson J stated that in ordering a party to pay another party’s costs to be assessed on the indemnity basis, regard will ordinarily be had to a contractual provision under which a party agrees to fully indemnify the other party for legal costs. In Clarence Property Corporation Limited the relevant contractual provision provided for the payment of costs on “a full indemnity basis”. The contractual provision in the Bill of Sale between the plaintiff and first defendant is silent on how costs should be calculated in circumstances where another provision of the Bill of Sale refers to costs being payable on an indemnity basis.
- [8]Having full regard to the provision in the Bill of Sale, I do not consider that warrants, alone, without something further in the conduct of the first defendant, my ordering the payment of the plaintiff’s costs to be assessed on the indemnity basis.
- [9]The plaintiff further contends that the conduct of the first defendant warrants an order for indemnity costs. The plaintiff argues that the first defendant’s pleaded defence, that the payments due and owing by it to the plaintiff were delayed, was not a defence known to the law, and in any event, that defence was contrary to an express clause in the Bill of Sale. At trial, however, the first defendant did not challenge the evidence adduced that the amounts agreed to under the contract were due and owing and had not been paid. It did not pursue the pleaded defence. The first defendant’s conduct in that regard was not vexatious or unwarranted or unreasonable.
- [10]The plaintiff further argues that the first defendant’s claim in respect of implied terms of the contract was doomed to fail and that warrants the ordering of indemnity costs. When the problems with the Catalina first emerged, the first defendant obtained professional advice which made it aware of a number of defects that needed to be rectified. Such were the defects that Mr Ebsworth, a marine surveyor notified the regulatory authority, AMSA who in turn issued a Direction Notice limiting the operation of the Catalina. It was not unreasonable for the first defendant to attend to remediation of those defects in order to allow the business to operate as it intended when the contract was entered into. I do not consider that it was unreasonable for the first defendant to form a view that the Catalina did not meet the terms of the contract. Nor was it unreasonable for the first defendant to consider that the second and third defendants ought to have identified the defects in its survey of the vessel during the period in which the vessel was able to be slipped for survey. The terms of the retainer of the second and third defendants turned on my assessment of the reliability of the evidence of Mr Prince and Mr Davis.
- [11]That the first defendant did not make good its counterclaim at trial does not mean that its conduct was unreasonable. The commencement of an action, even with poor prospects of success, without more, will not ordinarily justify the awarding of indemnity costs. Some of my findings on the counterclaim rested on an assessment of the reliability of the evidence of the plaintiff and of Mr Norris and Mr Prince. My findings with respect to the overloading event referred to at paragraphs [57] – [62] of my judgement demonstrate that the reliability of the evidence of each of Mr Inwood, Mr Norris and Mr Prince were important to my determination. Likewise, my findings with respect to the increase in the lightship weight of the Catalina turned on the reliability of the evidence of Mr Norris and Mr Prince.
- [12]Whilst the first defendant failed to prove on balance that the Catalina was unseaworthy at the time of entering into the contract, there was some evidence supportive of that contention, that being that the bulkheads were not watertight. On the evidence of Mr Holmes, a naval architect, that meant that the Catalina was, in his opinion, unseaworthy.
- [13]The plaintiff argues the first defendant withheld evidence and therefore breached its obligations of disclosure and unduly prolonged the case. I do not consider that Mr Norris, the Director of the first defendant deliberately withheld evidence. Ultimately the fact that invoices were not disclosed meant that the first defendant was unable to prove that the lightship weight of the Catalina at the time of sale was not as described in the stability book. I do not consider that the failure to disclose the documents prolonged the case. Indeed, it worked in the plaintiff’s favour.
- [14]The plaintiff further contends that the first defendant made a claim for loss of use of the vessel yet disclosed no documents relevant to such a claim and led no evidence of relevance to a claim for loss of use of the vessel. That the first defendant did not advance this aspect of its counterclaim does not mean that it acted unreasonably. It certainly did not add to the costs of the matter or consume unnecessary time during the trial.
- [15]The plaintiff also contends that the first defendant sought to rely upon expert evidence without proving the factual basis upon which the evidence was based. This contention is a reference to evidence proving that the electrical system on the vessel was in such a state as to make the vessel unseaworthy. The first defendant called Mr Ebsworth in the trial intending to prove the state of the electrical system through his evidence of having seen it. Objection was taken to the use of his evidence as expert evidence. His evidence was admitted on a limited basis. In any event, that Mr Ebsworth’s evidence was not capable of proving the state of the electrical evidence did not lengthen the trial nor did it result in the plaintiff being put to any expense obtaining its own expert report.
- [16]I do not consider that the criticisms that have been levelled against the first defendant warrant a finding that throughout the conduct of its case the first defendant was acting in a manner which was plainly unreasonable. I am not minded to exercise my discretion to order the first defendant pay indemnity costs prior to 11 May 2022.
Order
- [17]My order is that the first defendant pay the plaintiff’s costs of and incidental to the proceedings to be assessed on the standard basis for costs incurred prior to 11 May 2022 and on an indemnity basis for costs incurred after 11 May 2022.
- [18]By consent I further order that:
- (a)The first defendant pay the second and third defendants’ costs of and incidental to the counterclaim on the standard basis for costs incurred before 11 May 2022.
- (b)The first defendant pay the second and third defendants’ costs of and incidental to the counterclaim on the indemnity basis for costs incurred after 11 May 2022.
- (c)The plaintiff pay the second and third defendants’ costs of and incidental to the third-party claim to be assessed on a standard basis. Those costs are limited to any costs that are not otherwise included in the costs payable by the first defendant to the second and third defendants referred to in orders (a) and (b) above.
- (d)The costs payable by the plaintiff to the second and third defendants pursuant to order (c) above be included as disbursements (respectively before and after 11 May 2022) in the plaintiff’s own costs against the first defendant.