Zou v Yang [No 2][2024] QDC 39

DISTRICT COURT OF QUEENSLAND

1. [1]
   On 13 March 2024 I delivered judgment in the above three proceedings which were heard together: Zou v Wei; Wei v Yang; Yang v Zheng [2024] QDC 21. These reasons assume knowledge of those reasons and adopt the defined terms from those reasons.
2. [2]
   For the reasons given in that judgment, the Zheng parties were almost entirely successful. They succeeded on each of the debt claims in the Zou and Wei proceedings and the misrepresentation proceedings brought by Mr Yang against Mr Zheng were dismissed. However, Mr Yang succeeded on the Wei security issue, being the question of whether the Wei loan was secured against his Logan property.
3. [3]
   On delivery of my reasons, I invited the parties to make submissions on the proper form of the judgments for each of the Zou and Wei proceedings. I sought submissions on whether the judgments for the debts and/or for the interest should be in RMB yuan, or in Australian dollars; and the amounts of such judgments, including interest. I also sought submissions on costs on each proceeding.
4. [4]
   The parties were able to reach agreement on all issues relating to the form of the judgments in each proceeding with one exception, being whether Mr Yang’s success on the Wei security should be reflected in any manner in the costs orders in the Yang proceedings.

Currency and calcuations

5. [5]
   I accept the correctness of the submissions from Mr O'Brien and Ms Yates for the Zou and Wei proceedings, as to the Court’s power to order judgment in Australian dollars in respect of the loans and interest. They propose judgment for both the loan sum and interest in Australian dollars. Counsel for Mr Yang agrees that judgment should be in Australian dollars in each matter.

6. [6]
   Both also agree on the calculation of the judgments, including interest, in the Zou and Wei proceedings that:

   1. In the Zou proceedings, judgment should be $1,498,039.86 comprising the capital sum of $425,531.91 and interest of $1,072,507.95; and
   2. In the Wei proceedings, judgment should be $1,646,897.87 comprising the capital sum of $531,914.89 and interest of $1,114,982.98.
7. [7]
   I order judgment accordingly.

Costs

8. [8]
   The parties are agreed that costs should be ordered in favour of the Zheng parties in each proceeding, and that relevant offers justify indemnity costs orders from 29 July 2021 in each of the Zou and Yang proceedings. The only dispute is whether the costs order in the Wei proceedings should take account of Mr Yang’s success on the Wei security.

9. [9]
   The Court has a broad discretion to make costs orders and may make an order for costs which relates to a specific event or issue. Mr Truong (for Mr Yang) correctly submitted that one circumstance in which costs of a particular issue in a proceeding might be separately made is where that issue is definable and severable and has occurpied a significant part of the proceeding: Symbolic Resources Pty Ltd v Kingham (No 2) [2021] QSC 40 at [27]. He submitted that the Wei security issue was distinct from the other issues in the Wei proceeding and the subject of detailed submissions after oral addresses. He submitted that either Ms Wei ought to be ordered to pay Mr Yang’s costs of the Wei security issue, or alternatively that only a specified proportion of the costs of the Wei proceeding should be awarded to Ms Wei to allow for Mr Yang’s success on the Wei security issue.
10. [10]
    Ms Wei resisted such a costs order. She relied on the principle that ordinarily, a successful party should recover her costs even if not successful on all issues. In Speets Investment Pty Ltd v Bencol Pty Ltd (No. 2) [2021] QCA 39, the Court observed:

The general approach is that there must be special or exceptional circumstances to warrant depriving a successful party of its costs and the mere fact the the successful party has been unsuccessful on some issues will not ordinarily be sufficient to do so.

11. [11]
    As their Honour’s observed, however, that is the general approach, identifying what ordinarily is not sufficient. The Court recognised the broad discretion as to costs.
12. [12]
    In my view, there are several considerations which tend to support Mr Truong’s submission.
13. [13]
    First, the question of the whether the Debt Receipt conferred a valid and enforceable security over the Logan property was separate from the other issues in the Wei proceeding. Even though there was some overlap in evidence, there was no material overlap in any significant contentious issue. This was not like the situation where a successful plaintiff had run a series of different causes of action arising out of overlapping factual matters and directed at recovering the same or similar loss. The enforceability of the Wei loan was the condition precedent to the Wei security issue being a relevant at trial, but the disputed issues which affected the Wei loan did not impact on the disputed issues for the Wei security. The way the trial was conducted reflected that distinct character, as did my reasons.

14. [14]
    Second, I agree with submission by Ms Wei’s counsel that the Wei security had minimal impact on the course of evidence and took up little time during the parties’ cases. However, that does not mean that there were not distinct and substantial costs associated with the issue. The Wei security issue was a material matter in the briefing of experts and in the preparation of their reports. It was also the subject of detailed submissions both in oral addresses and more extensively after trial. The costs specific to the Wei security issue were material, albeit modest in the scheme of the whole of the costs of the Wei proceedings and the trial. The extent to which they should impact on the orders for costs overall can be managed by the terms of any order favourable to Mr Yang.

15. [15]
    Third, I do not accept the submission advanced by Ms Wei’s counsel that the offers to withdraw the caveat, which were set out in the affidavit of Ms Hagan sworn 17 April 2023, provided a basis for Ms Wei to succeed on costs on the Wei security despite failing at trial. All those offers were premised on the validity and enforceability of the Wei security and traded on position to make offers which would have, in substance, have provided similar security for the debt alleged, being the payment of money into Court.
16. [16]
    Fourth, I do not accept the submission that adverse credit findings made against Mr Yang are a reason to deprive him of costs of the Wei security. The purpose of costs is not to punish, as Ms Wei’s submissions recognise. Further, Mr Yang’s evidence played no part in the question of whether the Wei security was valid or not.
17. [17]
    Notwithstanding the above, the decisive consideration is the offer to settle the whole of the Wei proceedings on 29 July 2021 (the 29 July offer). That offer is plainly the offer which led the Mr Yang to concede (correctly, so far as I can see) that he ought to pay the costs of the Wei proceeding, other than the costs of the Wei security issue, on an indemnity basis from the date of that offer.
18. [18]
    The 29 July offer was made expressly under Chapter 9, Part 5 UCPR Uniform Civil Procedure Rules 1999 (Qld). It provided, relevantly:

OFFER TO SETTLE

This offer to settle is made by the Plaintiff to the Defendant.

The Plaintiff offers to settle the Plaintiff’s claim against the Defendant on the following terms:

1. the Defendant pays to the Plaintiff the sum of RMB 3,001,858, which is comprised as follows:
   3. a.
      RMB 2,214,000 for the debt; and
   3. b.
      RM 787,858 for interest;

2. the Defendant pays to the Plaintiff the Plaintiff’s costs; and
3. the proceedings be discontinued.

The Defendant may accept this offer by serving written notice of acceptance on the Plaintiff’s solicitors.

This offer is open for 15 days from the date upon which it is served on the Defendant, and is made pursuant to Chapter 9, Part 5 of the Uniform Civil Procedure Rules 1999 (Qld).

19. [19]
    The covering letter confirmed that the offer, if not compliant for some reason with the Rules, was made as a Calderbank offer. The letter identified the extent of compromise by reference to a comparison of the entitlement of Ms Wei on the debt claim and the offer made. The letter placed no weight on, nor even mentioned, the alleged rights arising out of the Wei security.
20. [20]
    Indeed, there was nothing in the 29 July offer, nor the covering letter, which sought to bargain by reference to the alleged validity of the Wei security. Rather, it simply sought payment of a compromised amount of the Wei debt to settle the whole of the claim. On its proper construction, the 29 July offer would have resolved the whole of the Wei proceedings, including the parts of the claim directed towards giving effect to the Wei security, without seeking any benefit under the offer referable to the alleged interest in the Logan property.
21. [21]
    On no view of it, then, could the result at trial have been seen as less favourable than the offer, even allowing for the failure on the Wei security issue. The only part of that offer which could conceivably have had any impact on the Wei security is that the offer required Mr Yang to pay the whole of the costs of the proceedings, including costs relevant to the Wei security. However, to my mind this is likely to have been a relatively minor sum at that stage.
22. [22]
    The 29 July offer was identified as an offer under Chapter 9 Part 5 UCPR. Relevant to this case is r. 360, which provides:

1. This rule applies if—
   3. (a)
      the plaintiff makes an offer that is not accepted by the defendant; and
   3. (b)
      the plaintiff obtains an order no less favourable than the offer; and
   3. (c)
      the court is satisfied that the plaintiff was at all material times willing and able to carry out what was proposed in the offer.
2. Unless the defendant shows another order for costs is appropriate in the circumstances, the court must order the defendant to pay the plaintiff’s costs—
   3. (a)
      calculated on the standard basis, up to and including the day of service of the offer; and
   3. (b)
      calculated on the indemnity basis, after the day of service of the offer.

23. [23]
    No submission was made that the 29 July offer was not a compliant offer under the Rules. Nor was there any suggestion that Ms Wei did not meet the pre-conditions in r. 360(1). In particular, given that no material benefit was bargained for on the basis of the validity of the Wei security, I find that the offer was more favourable than the order ultimately obtained. This follows because even though the Wei security was not established at trial, the offer sought to settle the Wei proceeding without seeking any benefit under the Wei Security. In effect that benefit of that claim was valued at nil.

24. [24]
    For that reason, Ms Wei is entitled to the benefit of the costs provisions in r. 360(2) in respect of the costs of the Wei proceeding. Despite the factors I have identified, which suggest a separate costs order might have been justified for the Wei security in the absence of the offer, the fact is that there was a compliant offer made under the Rules which would have finalised the whole of the proceedings on terms more favourable to Mr Yang than was achieved at trial, even allowing for his success on the Wei security issue. In those circumstances, I do not find the countervailing factors sufficient reason to depart from the default position contemplated by the Rules.
25. [25]
    Further, for the reasons articulated in paragraphs [20] to [23], I consider that if the 29 July offer was not a compliant offer under the Rules, it could and would take effect as a Calderbank offer in respect of the Wei security which it was unreasonable to reject.
26. [26]
    Accordingly, I make orders for costs in each proceeding as follows.

    1. In the Zou proceedings, the defendant pay the plaintiff’s costs of the proceeding:
       3. (i)
          On the standard basis, up to and including 29 July 2021; and
       3. (ii)
          On the indemnity basis, from and including 30 July 2021.
    2. In the Wei proceedings, the defendant pay the plaintiff’s costs of the proceeding:
       3. (i)
          On the standard basis, up to and including 29 July 2021; and
       3. (ii)
          On the indemnity basis, from and including 30 July 2021.
    3. In the Yang proceedings, the plaintiff pay the defendant’s costs:
       3. (i)
          On the standard basis, up to and including 11 September 2019; and
       3. (ii)
          On the indemnity basis, from and including 12 September 2019.