Northbound Property Group Pty Ltd v Carosi (No 2)
[2013] QSC 189
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- Unreported Judgment
- Northbound Property Group Pty Ltd v Carosi (No 2)[2013] QSC 189
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Northbound Property Group Pty Ltd v Carosi (No 2)[2013] QSC 189
Northbound Property Group Pty Ltd v Carosi (No 2)[2013] QSC 189
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Trial Division | |
PROCEEDING: | Application |
ORIGINATING COURT: | |
DELIVERED ON: | 31 July 2013 |
DELIVERED AT: | Supreme Court Rockhampton |
HEARING DATE: | On the Papers – submissions filed 28 June 2013 (Applicant) and 15 July 2013 (Respondents) |
JUDGE: | McMeekin J |
ORDER: | The Respondents pay the Applicant’s costs of the application on the standard basis |
CATCHWORDS: | COSTS – ON THE INDEMNITY BASIS – OFFER OF SETTLEMENT – CALDERBANK OFFER – whether an offer in an originating application is an offer under the UCPR – whether the respondents acted imprudently or unreasonably Uniform Civil Procedure Rules 1999 Motor Accident Insurance Act 1994 Bank Polska Kasa Opieki Spolka Akcyjan v Opara & Anor (No 2) [2010] QSC 358 Commonwealth v Gretton [2008] NSWCA 117 Di Carlo v Dubois [2002] QCA 225 Oshlack v Richmond River Council (1998) 193 CLR 72 Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 Jones v Bradley (No 2) [2003] NSWCA 258 Jones v Millward [2005] 1 Qd R 489 Lawes v Nominal Defendant [2007] QSC 103 South Eastern Sydney Area Health Service v King [2006] NSWCA 2 Todrell Pty Ltd v Finch & Ors [2007] QSC 386 Vagg v Mcphee (No 2) [2012] NSWSC 187 Walton Construction (Qld) Pty Ltd v Plumber by Trade Pty Ltd (No 2) [2012] QSC 280 |
COUNSEL: | G Crow QC for the applicant |
SOLICITORS: | Macrossan & Amiet for the applicant Bakker Vagnerelli Lawyers for the respondents |
[1] By an originating application filed 10 April 2013 the applicant sought declarations that it had validly terminated a contract for the purchase of certain land and improvements thereon and that it was entitled to be repaid a deposit paid under that contract. I heard the application on 14 June 2013.
[2] On 19 June 2013 I had the Registrar deliver my reasons in the matter. I made the declarations sought by the applicant and ordered that the respondents repay the deposit they had forfeited. I indicated that the applicant should have its costs. At that point I had received no submissions on the appropriate costs order.
[3] The applicant has since applied for its costs to be assessed on the indemnity basis. This order is not only resisted by the respondents but they seek to have costs awarded to them and on the indemnity basis.
[4] Rule 681(1) of the Uniform Civil Procedure Rules 1999 (UCPR) provides that costs are at the discretion of the court but follow the event unless the court considers another order to be more appropriate. Plainly the plaintiff succeeded in the event.
[5] The applicant bases its claim to indemnity costs on an offer it made to settle the matter. Effectively it offered to bear its own costs if the respondent acceded to the application. The offer was made in a letter dated 28 May 2013 and complied in form with the requirements of r360 of the UCPR.
[6] The respondents’ arguments are a little hard to follow. Their solicitors’ submission is not felicitous.
[7] Paragraphs 1-11 deal with what are called “Precedent Facts”. They largely consist of an attack on the judgment that I have made, either explicitly or implicitly. It is customary for legal practitioners to accept the rulings of the Court for the purposes of any costs argument, as there is no point doing otherwise.
[8] In paragraphs 12 and 24 of the submission, the complaint is made that there was no cross examination of the solicitor who swore an affidavit in support of the application. I note that no such cross examination was sought at the time of the application.
[9] Paragraph 13 alleges that the applicant and its directors were guilty of “misleading and deceptive conduct”. No such finding of fact has been made. The allegation involves a characterisation of the correspondence between the parties that was not even advanced in argument.
[10] Paragraph 14 asserts that an award of indemnity costs would cause hardship to the respondents, with a further complaint, again so far completely unfounded, of “misleading and deceptive conduct” by the directors of the applicant in negotiations. The allegation is repeated elsewhere in the submissions. It should not have been made.
[11] Paragraph 15 refers me to an email from a named individual whose connection to the respondents is not revealed by any evidence but who has signed the email as the “spokesperson for and on behalf of the sellers” in which an offer of settlement is made. The email is dated 26 May 2013, that is the day before the applicant’s offer. The offer proposed that the disputed deposit of $150,000 be divided and $50,000 repaid to the applicant and $100,000 retained by the respondents, each party to bear their own costs. The offer is not in the form contemplated by Chapter 9 part 5 of the UCPR. Plainly this offer was not more advantageous to the respondents than the orders that I eventually made.
[12] Paragraph 16 identifies, accurately, that the only concession in the offer made by the applicants was as to costs, but argues that was no real concession at all. I am not sure why not. Usually costs follow the event. Plainly a willingness to give up an order for costs in a winning case involves a compromise. It is submitted that an offer of compromise “is to be exclusive of costs”. No authority is cited for the proposition. As a general statement it is plainly wrong. The intended reference may be to “all up” offers which are usually inadvisable as the court cannot know whether an offer was more advantageous than the judgment obtained or not. That is not the case here.
[13] Paragraph 17 (and perhaps 21 which seems to add nothing to an already arid debate) asserts that the applicant, through its legal representatives, could have sought costs at the time of the hearing. The submission leads nowhere but I observe that the usual practise is to leave submissions on costs to a time after the Court’s determination is known. That is for good reason. It saves wasted arguments. And sometimes it is not appropriate for the Court to know what offers have been made. For example, in the present case I was not told, and I assume respondents’ counsel did not wish me to know, that the respondents had offered to refund part of the deposit prior to the hearing. In fact the rules forbid disclosure where the offer is made under Chapter 9 Part 5 of the UCPR: r 357. Counsel acted quite correctly.
[14] Paragraphs 18 and 19 complain of the difficulties encountered because the applicant had the temerity to bring the application in Rockhampton and not more conveniently for the respondents in their domicile of South Australia. The respondents having accepted the venue, the submission, again, leads nowhere, but given that the contract relates to land at Gladstone the choice of venue seems entirely appropriate. That the directors of the applicant apparently reside in Central Queensland as does the applicant’s solicitor seems inconsequential.
[15] Further complaint is made of the costs of airfares from Brisbane for a town agent and counsel. It is unproductive for any practitioner to complain of having to fly legal representatives from Brisbane to Rockhampton, a choice entirely at the whim of the client. That complaint will invariably fail. There are many competent practitioners resident in this city in both branches of the profession. If a client chooses not to use them then the cost is properly to be borne by the client who makes that choice. I note in passing that the submission is poor reward for the strong arguments presented by Mr Coulsen of counsel who appeared for the respondents but who, I hasten to add, is not responsible for this submission.
[16] Paragraphs 22 to 29 of the submission respond to the applicant’s request for indemnity costs. Again many statements are made that are unsupported by the evidence or irrelevant but the gravamen of the response is that that the rejection of the applicant’s offer was not “imprudent”, a submission that has the considerable advantage of being at least potentially relevant to the issues.
[17] The arguments advanced in support however do not make out the claim.
[18] Before turning to those arguments I note that two submissions were of potential relevance but that relevance was not explained. One submission refers to the “significant issues” agitated by the respondent’s counsel but the point is unfortunately not developed. Another submission refers to the applicant’s “Calderbank letter” but again without explanation of the significance of the point.
[19] To turn to the arguments that were advanced: It is said that there were “contentious issues of fact” and the “full parameters of the dispute were still uncertain”. Neither assertion is accurate. The case was argued on each side, and my decision was made, on the basis of the correspondence that passed between the parties and the terms of the contract, all of which were well known to the parties and none of which was disputed. What was contentious was the effect of the correspondence and the meaning of the terms of the contract.
[20] Paragraph 23 refers to an offer made by the respondents of an “Amended Contract”. I have no evidence of any such offer unless the reference is to the email of 26 May that I have already referred to and dealt with. The sense of the paragraph however suggests that it is intended to be a reference to an offer made before the application was filed in which case evidence would be needed to justify the reception of the submission.
[21] It is submitted in paragraph 25 that the applicant’s offer was no offer at all as the “non refundable deposit was one of the material facts in issue”. In my experience it is customary for an offer of settlement to relate to material matters in issue. I confess to not understanding the point.
[22] Paragraph 27 is equally obscure. The solicitor points out that the applicant sought costs on the indemnity basis in its application and before the letter setting out the offer now relied on by the applicant. So much is plainly right. It is then asserted that “accordingly, there was no concession made by the applicant to settle the matter.” Again I confess to not understanding the point. The submission, at least, overlooks the respondent’s own earlier, and accurate, submission that the one concession made by the applicant’s offer was as to costs.
[23] Paragraph 28 complains again that the applicant’s solicitor and the only relevant deponent, Mr Telford, was not cross examined, and asserts that the respondent sought in its correspondence to have the matter determined by way of Claim and Statement of Claim. Unidentified issues of fact are asserted. All this is irrelevant. The matter proceeded, by agreement before me, by way of originating application and without cross examination.
[24] Paragraph 29 complains that a potential witness was not called. It is too late now to make that complaint and in any case I very much doubt that a secretary in a legal office might have anything relevant to say that could affect the rights of the parties.
[25] Paragraphs 30 to 32 of the submission argue that the respondents should have their costs paid by the successful applicant. The rejection of the applicant’s offer is again characterised as neither “imprudent or unreasonable.” The submission recognises that to deprive a successful applicant of its costs is an exceptional course but says that it is justified here because the applicant was guilty of relevant misconduct. Reference is made to McHugh J’s decision in Oshlack v Richmond River Council (1998) 193 CLR 72 at pp96-97, [66]-[68].
[26] The alleged misconduct involves, again, the allegation, unsupported by any finding of fact or even prior argument at the hearing, that “there were the issues of the misleading and deceptive conduct by the Applicant/Directors/Guarantors in relation to finance not being applicable.” As already pointed out there was no evidence of any such conduct. The submission goes on to re-argue the points already lost on the application.
[27] The respondents’ submission lacks any factual foundation or merit.
[28] There are two relevant points. The first is whether the applicant’s offer was made under Chapter 9 Part 5 of the UCPR or rather whether it was akin to a Calderbank offer.
[29] If the offer was one made under the rules then the second issue is whether the respondent can show some reason why the costs should not be assessed on the indemnity basis. Generally, exceptional circumstances are required to justify such an order denying the plaintiff’s entitlement: South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [83] per Hunt AJA (Mason P and McColl JA agreeing).
[30] Despite the compliance by the applicant with the formal requirements of r 360 there are two reasons for doubting that the rule applies. The proceedings were commenced by originating application, not by way of a Claim and Statement of Claim. The first point is that the relevant rules, rr 360-361, refer to “plaintiffs” and “defendants”, terminology suitable to the latter procedure not to proceedings commenced by originating application.
[31] Secondly, and perhaps more cogently, the rule refers to the obtaining of a “judgment” no less favourable than the offer. “Judgment” is defined in Schedule 4 to the UCPR by reference to r 659 which provides: “Final relief granted in a proceeding started by claim is granted by giving a judgment…”.
[32] That definition plainly restricts the term “judgment” to proceedings commenced by claim and to exclude proceedings where final relief has been obtained but by way of an originating application. While final relief might well be the result of a proceeding commenced by originating application, and it is here, the drafters of the rule could hardly not have appreciated the significance of the use of the word “judgment” and the use of the descriptors ”plaintiff” and “defendant”. Hence textual considerations strongly suggest that the rules relating to formal offers do not apply to proceedings commenced by originating application.
[33] Two decisions of this Court are consistent with that approach. In Bank Polska Kasa Opieki Spolka Akcyjan v Opara & Anor (No 2) [2010] QSC 358 it was conceded by the successful party that rr 360 and 361 could not apply, the proceedings having been commenced by originating application. Philip McMurdo J made no comment on that concession but seemed implicitly to adopt it as he rejected an argument that the applicants were in substance “plaintiffs” in the circumstances there pertaining. Nonetheless his Honour allowed costs on the indemnity basis restricted to the period from the date of the offer.
[34] In Walton Construction (Qld) Pty Ltd v Plumber by Trade Pty Ltd (No 2) [2012] QSC 280 Margaret Wilson J held that rule 360 was inapplicable to the case, apparently because the proceedings were there commenced by originating application.
[35] In my view the proper characterisation of the offer is that it is one not made under Chapter 9 Part 5 of the UCPR as the rules set out there do not apply to proceedings commenced by originating application. That does not mean that the provision in the rules does not provide guidance as to how the discretion on costs should be exercised.
[36] Nonetheless it is clear that the right to indemnity costs is not automatic where the offer cannot be brought under the rules. In Lawes v Nominal Defendant [2007] QSC 103 Byrne J (as he then was) said of a mandatory final offer made under the Motor Accident Insurance Act 1994 regime that the principles applicable to a Calderbank offer were analogous and he summarised those principles as follows:
“…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: See Crump v Equine Nutrition Systems (No 2) [2007] NSWSC 25 at [39]-[41]; Gove v. Black [2006] WASC 298 at [43]-[47]; Balderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited [2006] NSWSC 583 at [30]-[37]; Fordyce v Fordham (No 2) [2006] NSWCA 362 at [16], [21]; Devprov v Seamark Pty Ltd [2007] QSC 31 at [4]; Westpac Banking Corporation v Commissioner of State Revenue [2004] 55 ATR 72[2004] QSC 19 at [30]-[32]; Gretton v The Commonwealth of Australia [2007] NSWSC 149 at [11]-[17]; Food Improvers Pty Limited v BGR Corporation Pty Ltd (No 4) (2007) 25 ACLC 177,[2007] FCA 220 at [35]; and Grice v The State of Queensland [2005] QCA 298 at [7].
Among the pertinent considerations is whether it appears that the party sought to be made liable for costs on an indemnity basis has imprudently or unreasonably failed to accept a Calderbank offer of compromise.
That will often involve an attempt to form a view about the relevant strengths and weaknesses of the cases that ought to have been apparent to the parties when the offer was made: cf Baulderstone Hornibrook Engineering at [34]-[35]; and Brymount Pty Ltd v Cummins (No 2) [2005] NSWCA 69 at [11]-[14].”
[37] I think that the relevant principles that apply to a Calderbank offer may be summarised as:[1]
(a) The onus falls on the offeror (here the applicant) to convince the court that it should exercise its discretion in its favour, the offeree having acted unreasonably or imprudently in rejecting the offer: see Lawes v Nominal Defendant [2007] QSC 103; Jones v Bradley (No 2) [2003] NSWCA 258; Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 per Giles, Ipp and Tobias JJA at [26].
(b) The offeror must also show that the offer involved some element of compromise: see Jones v Millward [2005] 1 Qd R 489;
(c) The court strives to achieve fairness in the result: see the discussion in Commonwealth v Gretton [2000] NSWCA 118.
[38] I accept that here there was an element of compromise in the concession made that each side should bear their own costs. That was one of the examples of a sufficient concession in an “all or nothing” case given by Holmes JA in Jones v Millward (supra).
[39] There was nothing about the respondents conduct in defending the suit that would justify any condemnation of their approach as involving irresponsibility: see Todrell Pty Ltd v Finch & Ors [2007] QSC 386 per Chesterman J. The only question is: did non acceptance of the offer involve a degree of imprudence or unreasonableness?
[40] The applicant points out that all relevant facts were known to each of the parties at the time of filing of the application. By the time of the offer, sufficient time had passed to enable the respondents to obtain advice and assess their position. The assessment of strengths and weakness of their case, spoken of by Byrne J in Lawes, was easily able to be carried out and is a factor in favour of the applicant.
[41] The reasons advanced by the respondent for not accepting the offer are entirely unpersuasive. However there are three points that could be made:
(a) As I remarked in my reasons, the submissions made by counsel for the respondents were not without force;
(b) Problems between the parties arose because of the ambiguity in a letter written by the applicant’s solicitor. As I noted in my reasons “the words used in the letter, written by an experienced solicitor, are remarkably inapt in seeking to convey the meaning that the applicant was not satisfied with its due diligence enquiries…”. From that letter all the subsequent problems flowed;
(c) The fact that the respondents failed to persuade me that the correspondence had the effect they urged does not demonstrate, necessarily, unreasonableness in their continuing to maintain their entitlement to the disputed deposit. Questions of construction are notoriously difficult and there are many cases which show that different minds can reasonably differ on the meaning of contracts and the effect of correspondence.
[42] I am conscious too of the statement by White J (as her Honour then was) in Di Carlo v Dubois [2002] QCA 225 at [40] that ‘[i]t is important that applications for the award of costs on the indemnity basis not be seen as too readily available ...’.
[43] On balance I am not persuaded that the respondents acted unreasonably or imprudently in pursuing their defence of the suit.
[44] The respondents are ordered to pay the applicant’s costs on the standard basis.
Footnotes
[1] See Vagg v Mcphee (No 2) [2012] NSWSC 187 per Schmidt J at [18].