Hoppen v Stoneridge Constructions Pty Ltd (No. 2)
[2024] QDC 24
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- Unreported Judgment
- Hoppen v Stoneridge Constructions Pty Ltd (No. 2)[2024] QDC 24
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Hoppen v Stoneridge Constructions Pty Ltd (No. 2)[2024] QDC 24
Hoppen v Stoneridge Constructions Pty Ltd (No. 2)[2024] QDC 24
DISTRICT COURT OF QUEENSLAND
CITATION: | Hoppen v Stoneridge Constructions Pty Ltd (No. 2) [2024] QDC 24 |
PARTIES: | TIMOTHY JOEL HOPPEN and ELISE GABRIELLE HOPPEN (plaintiff) v STONERIDGE CONSTRUCTIONS PTY LTD ACN 609 318 621 (defendant) |
FILE NO: | BD 2885 of 2022 |
DIVISION: | Civil |
PROCEEDING: | Costs application |
ORIGINATING COURT: | Maroochydore Magistrates Court |
DELIVERED ON: | 22 March 2024. |
DELIVERED AT: | Brisbane |
HEARING DATE: | Written submissions received 2 February 2024, 8 February 2024 and 13 February 2024. |
JUDGE: | Byrne KC DCJ |
ORDER: |
|
CATCHWORDS: | JUDGMENT – COSTS – where the plaintiff commenced proceedings seeking damages for breach of contract and the refund of monies paid under a deposit – where the defendant was wholly successful at trial – where the defendant seeks indemnity costs – where the plaintiff concedes costs should be awarded but on a standard basis only – whether departure from the usual order of costs on the standard basis is justified – whether departure from the usual rule that costs up to the date of transfer be ordered on the Magistrates Court scale is justified |
LEGISLATION: | Uniform Civil Procedure Rules 1999 (Qld) rr 361, 688, 1003. |
CASES: | Bulsey v State of Queensland [2016] QCA 158. Calderbank v Calderbank [1975] All ER 333. Fick v Groves (No. 2) [2010] QSC 182. Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2) (2005) 13 VR 435. Hoppen v Stoneridge Constructions Pty Ltd [2024] QDC 2. S.H.A. Premier Constructions Pty Ltd v Niclin Constructions Pty Ltd (No. 2) [2020] QSC 323. Stewart v ATCO Controls Pty Ltd (in liq) (No. 2) (2014) 252 CLR 331. Thiess Pty Ltd v FLSMIDTH Minerals Pty Ltd (No. 2) [2010] QSC 120. Todrell Pty Ltd v Finch (No. 2) [2007] QSC 386. |
COUNSEL: | Mr. W. Redpath (sol) for the plaintiff. Mr. N.M. Cooke for the defendant. |
SOLICITORS: | Hawkes Lawyers for the plaintiff. Wheldon & Associates for the defendant. |
Introduction
- [1]The plaintiff commenced proceedings against the defendant seeking damages for breach of contract and the refund of some monies paid under a deposit. The defendant was wholly successful on the trial and the claim was dismissed.[1] The issue of costs now falls for consideration.
- [2]The proceedings were commenced in the Magistrates Court on 13 July 2021. At that time only one of four asserted heads of damages was particularised in terms of quantum, in an amount of $29,640. The other claimed heads of damage were variously described as “to be advised” or “to be particularised”. The sum of $3,480 was also sought as monies to be repaid from the deposit paid under the contract.
- [3]On 31 October 2022, the proceedings were transferred, by the Registrar with the consent of both parties, to the District Court. That was apparently precipitated by the preparation of a “Schedule of Damages” by the plaintiff which particularised a total claim of $215,179.03. As noted in the reasons, there were issues with proof of the amounts stated therein. Had I found for the plaintiff, given the state of the evidence, I would have awarded no more than $24,480.[2]
- [4]On 27 October 2022, four days prior to the transfer of the proceedings to the District Court, the defendant offered to settle the proceedings on a “without prejudice save as to costs” basis. In essence it offered to pay the plaintiff $30,000 in return for the proceedings being discontinued, with the parties to bear their own costs. The offer was expressed to have been made under Chapter 9, Part 5 of the UCPR, and remained open until 11 November 2022 (“the first offer”). It was not accepted.
- [5]The trial was listed for hearing before Barlow KC DCJ to commence 22 May 2023. Instead of proceeding, his Honour heard interlocutory applications which resulted in a costs order in respect of the applications and the adjournment of the trial being made on 24 May 2023 in favour of the defendant, on the standard basis. The trial was listed to commence before me on 30 May 2023.
- [6]The next day the defendant made alternative offers to settle the proceedings or to settle the costs order of 24 May 2023 (“the second offer”). Underlying both offers was the assertion that Counsel’s fees alone before Barlow KC DCJ amounted to $9,000 (excluding GST).
- [7]The offer to settle the proceedings required the plaintiff to pay the defendant $11,000, with the parties to bear their own costs of the proceeding. The alternative offer to settle the costs order required the plaintiff to pay the defendant $8,000, with the parties to bear their own costs of the costs order. Each of those alternative offers was expressed to be made pursuant to the principles in Calderbank v Calderbank [1975] All ER 333, to remain open until 12.00 pm on 29 May 2023 and to be open “without prejudice save as to costs”. They were also expressed as being “a commercial option to resolve the dispute without the incurrence of unnecessary fees, in addition to potentially another adverse costs order being awarded against” the plaintiff. Neither offer was accepted.
Submissions
- [8]The defendant submits that it should be awarded indemnity costs from the commencement of the proceedings or, alternatively, from the date of the first offer or, alternatively, from the date of the second offer. In essence it is submitted that the commencement and pursuit of the proceedings was so ill-conceived as to be irresponsible and justifies awarding indemnity costs. As to the alternative bases, it is submitted that the refusal of the respective offers was imprudent and unreasonable and justifies awarding indemnity costs.
- [9]The plaintiff accepts that the defendant is entitled to its costs, but argues they should be paid on the standard basis only. They argue that as there was always a triable issue, it was not an ill-conceived action and that the respective refunds were not unreasonably sought given the circumstances under which they were made.
Consideration
- [10]The defendant’s primary contention is that it was irresponsible of the plaintiff to have commenced and pursued proceedings in the circumstances, thereby exposing the defendant to unnecessary costs.[3] Regardless of the nomenclature used, there must be something about the facts and circumstances beyond a lack of merit of a party’s case before departure from the usual order of costs on the standard basis is justified.[4]
- [11]As the defendant submits, some of the plaintiff’s pleadings could not be sustained in light of the terms of the contract itself. Further, the pleadings as to the quantum of damages sought were, as outlined in the reasons, defective and there was ultimately a lack of proof of parts of them. Nonetheless, I am not satisfied any of the defects relied on by the defendant rises to a level to justify indemnity costs from the commencement of the proceedings.
- [12]The defects in the pleadings concerning the contractual obligations appear to be the result of sloppiness in drafting rather than deliberate or reckless misstatements of material facts.[5] The pleading that the defendant was obliged to apply for a development application for the construction of the house did touch on the essence of its case but was easily dealt with in the defence such that it did not actually affect the real issue in the trial; the reasonableness of the timing of the defendant’s lodgement of material for the building approval. That and the other pleading defects going to liability, were readily dealt with in the Defence.
- [13]The defendant also specifically points to the plaintiff’s approach to the issue of quantum when the proceedings were commenced to justify an order for indemnity costs.
- [14]It can be accepted that the plaintiff’s approach to proof of quantum as at the commencement of the proceedings was, at least, poor. Three of the four heads of damages claimed were not quantified. The largest component of the overall quantum claimed was always going to be based on the asserted additional cost of building materials and, if the date of the tendered expert reports can be relied upon for the purpose, the plaintiff did not know what quantum would be calculated by the expert when the proceedings were commenced. This practice is not to be encouraged and supports the defendant’s submissions, at least in circumstances where there was no time limitation approaching.
- [15]However, it is also relevant that the defendant neither complained about the failure to particularise the quantum in its Defence, nor did it take any other action such as applying to strike out that part of the Statement of Claim or asserting a right to indemnity costs if the pleading was not rectified. Secondly, the plaintiff commenced proceedings in the Magistrates Court, thereby avoiding the risk of exposing the defendant to unnecessary costs of the higher jurisdiction. Thirdly, there is nothing to suggest the plaintiff did not reasonably expect that the pleaded heads of damage would be quantified, in time.
- [16]Finally, the amount of damages which I would have awarded had liability been established does not, in this case, establish unreasonableness in the commencement of the proceedings. Comparing the notional award with the jurisdiction of QCAT, and to argue that legal costs may have been eliminated in that jurisdiction is to engage in hindsight reasoning. The issue is the reasonableness at the time the proceedings were commenced. Although not calculated with even remote precision at the time the proceedings were commenced, the major component of the damages sought would have been reasonably expected to bring the claim within at least the monetary jurisdiction of the Magistrates Court. That it was ultimately not proven was largely due to the movement of the house onto the block of land, which occurred much later, and the failure to address the impact of that on the assessment of damages.
- [17]To re-iterate, the manner in which the proceedings was commenced is not to be encouraged and may have provided a fertile basis to apply for indemnity costs. However, I am not satisfied in the particular circumstances before me that such an order is appropriate.
- [18]The defendant’s first alternative claim for costs is that they be awarded on an indemnity basis from the date of the first offer, namely 27 October 2022.
- [19]At the time that offer was made, r 361, if engaged, contemplated the defendant paying the unsuccessful plaintiff’s costs to the date of offer and the plaintiff paying the defendant’s costs thereafter also on the standard basis, unless otherwise ordered. The former r 361 applies here as it was operative at the time the offer was given.[6]
- [20]The rule was prima facie engaged in that the pre-conditions contained in the rule were met.[7] However, I am not prepared to order the defendant to pay the plaintiff’s costs to the date of the offer. To do so would be to, in effect, reward the earlier outlined poor practice in the drafting of the pleadings for quantum, particularly where the plaintiff has been wholly unsuccessful in the proceedings.
- [21]The defendant contends that indemnity costs should be paid from the date of the first offer, essentially because it was unreasonable to refuse it. I do not agree.
- [22]The offer was dated four days prior to the consensual transfer of the proceedings to the District Court, and on the same day as an obviously unsuccessful mediation occurred. It remained open for another 11 days. There is no evidence as to precisely when the Schedule of Damages was served on the defendant, but it is dated 28 June 2022 and it must have been served prior to the granting of the consent order, and also before the mediation. While the offer comprised payment of an amount that roughly equated to the amount claimed at the commencement of proceedings, it was well less than the amount the defendant was then aware was in fact being sought.
- [23]Leaving aside the inflated amount wrongly claimed in the Schedule for money wrongly retained from the deposit, there was nothing to suggest the amounts claimed in it could not have been proven. The fact that I would not have awarded anywhere near the amount ultimately sought largely revolved around the movement of the house onto the block and the issues with proof arising from that. The house was not moved onto the block of land until early March 2023[8] and so well after the date of the first offer. The essential issue of reasonableness was at that time a triable issue, as it was during the whole of the proceedings.
- [24]In those circumstances, an offer to settle effectively for $30,000 and for each party to bear their own costs does not, in my view, realistically contain any element of compromise even though it would have meant the defendant paying a sum of money and bearing its own costs. Given the likely legal fees incurred by the plaintiff to that point and that there seemed to be prospects of success at that time, it was not unreasonable to refuse the offer.
- [25]However, the same cannot be said for the second offer.
- [26]The principles for considering Calderbank offers are well established.[9] The offer contemplated two alternative offers, as set out earlier. Only the one concerning the settling of the proceedings need be considered here.
- [27]The offer was made the day after the initial trial listing had been exhausted due to the preliminary applications. The plaintiff must be taken to have been ready for trial and to have well understood the issues.
- [28]The offer was made on a Thursday and was expressed to be open until midday on the following Monday, the day prior to the trial commencing before me. In the circumstances, that time was more than sufficient to properly consider it.
- [29]Although the second offer did not expressly foreshadow an application for indemnity costs, that is not necessarily a prerequisite, although it is a relevant factor.[10] As noted earlier, the offer was marked as being without prejudice save as to costs and it also referred to the avoidance of another adverse costs order. I am satisfied that the plaintiff was sufficiently put on notice as to an application for indemnity costs if not accepted, and they have not submitted to the contrary.
- [30]The central issues are the extent of the compromise offered and the reasonableness of the refusal. Given the indication of Counsel’s fee for Judge Barlow’s order, the offer was for the plaintiff to pay the defendant an additional $2,000, and each side to bear their own costs. Regardless of whether all of Counsel’s fees would have been awarded on the standard basis ordered, it is obvious that the defendant’s overall legal costs of the proceeding must have been much higher. The offer contained a recognisable element of compromise.
- [31]By the time of the offer the plaintiff must have known, or can be assumed to have known, that its capacity to prove quantum was very limited. In particular, the fact that the plaintiff had moved a house onto the vacant block of land, but with no evidence as to when or whether that was a suitable arrangement, effectively scuppered any prospect of proving the major component of the damages sought. The plaintiff’s legal representatives became aware that the house had been moved earlier in the month of trial[11] and it must be assumed that the plaintiff was given appropriate advice.
- [32]The plaintiff submits that it was reasonable to refuse the offer when there was a triable issue that was, it submits, finely balanced and where the offer did not reflect the plaintiff’s costs incurred to that date.
- [33]A unanimous High Court bench has observed:
“The non-acceptance of a Calderbank offer is a factor, in some cases a strong factor, to be taken into account on an application for indemnity costs. The respondent submits that its rejection of the offer was not unreasonable. If that be the test, it would appear to require at least that the respondent point to a reason for not accepting the offer beyond the usual prospects of being successful in litigation.”[12]
- [34]In my view, while the issue of the reasonableness of the time taken for the defendant to apply for the building approval was a triable issue, the plaintiff’s position when properly assessed could not have been seen as being so strong as to justify the refusal of the second offer. Its acceptance no doubt would have resulted in a financial impact on the plaintiff, but that was the result of the position they now found themselves in. It was unreasonable to require the defendant to incur further costs at trial when the offer was in effect offering to substantially limit their exposure to further financial detriment, and the plaintiff should be required to pay indemnity costs from the date of the second offer.
- [35]There was no order made as to the costs of the proceeding on the transfer to this Court. Rule 688 of the UCPR requires that costs up to the date of transfer be ordered on the Magistrates Court scale, unless otherwise ordered. While the defendant has broadly submitted it is entitled to costs on the District Court scale, it has not specifically addressed why departure from that rule is justified. I can see no reason to depart from the usual rule.
Orders
- [36]My orders are:
- The plaintiff is to pay the defendant’s costs on the standard basis and on the scale applicable to the Magistrates Court to and including 31 October 2022.
- The plaintiff is to pay the defendant’s costs on the standard basis and on the scale applicable to the District Court from 1 November 2022 to and including 24 May 2023.
- The plaintiff is to pay the defendant’s costs on the indemnity basis on and from 25 May 2023.
Footnotes
[1]Hoppen v Stoneridge Constructions Pty Ltd [2024] QDC 2 (“the reasons”).
[2]Reasons at [115]-[134].
[3]Todrell Pty Ltd v Finch (No. 2) [2007] QSC 386.
[4]Thiess Pty Ltd v FLSMIDTH Minerals Pty Ltd (No. 2) [2010] QSC 120, [4].
[5]cf Fick v Groves (No. 2) [2010] QSC 182.
[6]Rule 1003 of the UCPR.
[7]Notably, at the time r 361 did not refer to the plaintiff obtaining a judgment. It referred to the plaintiff “not obtaining an order…”.
[8]Trial transcript 3-12, ll 30-43.
[9]Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2) (2005) 13 VR 435; S.H.A. Premier Constructions Pty Ltd v Niclin Constructions Pty Ltd (No. 2) [2020] QSC 323, [8]-[14].
[10]Bulsey v State of Queensland [2016] QCA 158, [54].
[11]Trial transcript 3-12, l 30 to 3-13, l 1.
[12]Stewart v ATCO Controls Pty Ltd (in liq) (No. 2) (2014) 252 CLR 331, [4].