Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd (No 2)
[2013] QSC 257
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- Unreported Judgment
- Appeal Determined (QCA)
- Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd (No 2)[2013] QSC 257
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Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd (No 2)[2013] QSC 257
Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd (No 2)[2013] QSC 257
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO: | |
Trial Division | |
PROCEEDING: | Costs application |
DELIVERED ON: | 24 September 2013 |
DELIVERED AT: | Brisbane |
HEARING DATE: | Written submissions received 17 and 19 September 2013 |
JUDGE: | Justice Margaret Wilson |
ORDER: | The plaintiff is to pay the defendants’ costs of and incidental to the proceeding, including reserved costs if any, on the standard basis. |
CATCHWORDS: | PROCEDURE – COSTS – DEPARTING FROM THE GENERAL RULE – ORDER FOR COSTS ON INDEMNITY BASIS – where the plaintiff’s claim was dismissed – where the defendants had made three offers to settle – where r 361 of the UCPR was inapplicable – where there was no obvious correlation between the relief the plaintiff sought at trial and what the defendants offered – where the “interest” offered to the plaintiff was unclear – whether the plaintiff unreasonably rejected the offer – whether costs should be assessed on the indemnity basis. Uniform Civil Procedure Rules 1999 (Qld), ch 9 pt 5, r 361 Anderson v AON Risk Services Australia Ltd [2004] QSC 180 at [10]; |
COUNSEL: | PW Hackett for the plaintiff VG Brennan for the defendants |
SOLICITORS: | Bernard Ponting & Co for the plaintiff |
[1] The plaintiff’s claim was dismissed on 12 September 2013.[1]
[2] Costs should follow the event. The issue is whether those costs should all be assessed on the standard basis or whether some of them should be assessed on the indemnity basis.
[3] The defendants made three offers to settle – on 13 June 2012, 12 February 2013 and 21 February 2013. The pleadings had closed and disclosure had been completed before the first offer was made.
The first offer
[4] The first offer was pursuant to chapter 9 part 5 of the Uniform Civil Procedure Rules 1999 (Qld) (“the UCPR”). It was in these terms –
“OFFER OF SETTLEMENT
TAKE NOTICE that the defendants offer to settle the plaintiff’s claim against the defendants on the following basis:
1.The parties acknowledge that the plaintiff holds 3.55 percent of the equity in the Group as at the date of this offer.
2.The Group means the entities that make up the business of Ballina/Byron/Coolangatta/Tweed/Palm Beach/McGrath Estate Agents being:
(a)Riverwalk Realty Pty Ltd in its own right and as trustee for the Riverwalk Realty Unit Trust, which beneficially owns the Ballina business.
(b)Samel Holdings Pty Ltd in its own right and as trustee for the Samel BP Unit Trust, which beneficially owns the Palm Beach business,
(c)Eldsure Pty Ltd in its own right and as trustee for the Riverwalk Realty (Coolangatta) Unit trust, which beneficially owns the Tweeds Heads business.
3.The parties agree the plaintiff’s 3.55 percent interest will be represented by the plaintiff holding 715,698 shares in Riverwalk Realty Pty Ltd and 715,698 units in the Riverwalk Realty Unit Trust. The defendants undertake to cause those shares and units to be issued to the plaintiff.
4.The ninth, tenth, twelfth, thirteenth and fourteenth defendants (Trevor Ian Mills, Glenn David Mills, Lynne Robyn Yaldwyn, Philip John Nicholson and David William Sommerville) will grant the plaintiff a put option, pursuant to which it can require them to purchase its shares and units-
(a)for the sum of $59,319.93 on the date 12 months from the date of settlement, and
(b)for the valuation price or $59,319.93 (whichever is the higher) on the date 24 months from settlement. In that event, the value of the shares will be calculated by reference to net assets of the company (ie. assets minus liabilities) only.
5.The third defendant (Samel Holdings) will pay to the plaintiff the sum of $30,000 (including any amount for GST) in full and final settlement of the plaintiff's costs in these proceedings.
This offer, made in accordance with part 5, chapter 9 of the Uniform Civil Procedure Rules 1999, is open for acceptance for a period of 14 days after the date of its service.
Acceptance of this offer may only be affected [sic] by forwarding a written notice of acceptance to the undersigned solicitors for the plaintiff.
This offer is open for acceptance for a period of 14 days from the date of the date of receipt of this offer by the plaintiff’s lawyers.”
[5] Rule 361 provides –
“361 Costs if offer to settle by defendant
(1)This rule applies if—
(a)the defendant makes an offer to settle that is not accepted by the plaintiff and the plaintiff obtains a judgment that is not more favourable to the plaintiff than the offer to settle; and
(b)the court is satisfied that the defendant was at all material times willing and able to carry out what was proposed in the offer.
(2)Unless a party shows another order for costs is appropriate in the circumstances, the court must—
(a)order the defendant to pay the plaintiff’s costs, calculated on the standard basis, up to and including the day of service of the offer to settle; and
(b)order the plaintiff to pay the defendant’s costs, calculated on the standard basis, after the day of service of the offer to settle.
(3)However, if the defendant’s offer to settle is served on the first day or a later day of the trial or hearing of the proceeding then, unless the court otherwise orders—
(a)the plaintiff is entitled to costs on the standard basis to the opening of the court on the next day of the trial; and
(b)the defendant is entitled to the defendant’s costs incurred after the opening of the court on that day on the indemnity basis.
(4)If the defendant makes more than 1 offer satisfying subrule (1), the first of those offers is taken to be the only offer for this rule.”
[6] Because the plaintiff did not obtain any judgment in its favour, the rule is inapplicable.[2]
[7] Nevertheless the court can take account of the plaintiff’s non-acceptance of the offer in the exercise of its discretion as to costs. According to the circumstances, indemnity costs may be awarded where a plaintiff has unreasonably rejected an offer.[3] Other factors may be relevant to the exercise of the discretion, including whether the offer involved any genuine element of compromise and the stage the litigation had reached when it was made.
[8] There is no obvious correlation between the relief the plaintiff sought at trial and what the defendants offered.
[9] In their submissions at trial, the plaintiff’s counsel sought the following orders –
“Appropriate Orders
56.On the First Agreement and representation, judgment should be entered in favour of the plaintiff against the Personal Defendants and Original Group Companies as those terms are defined in the SoC (paragraphs 12 and 12A of the SoC) jointly and severally for the sum of $700,000.00 together with interest at the rate of 10% from 29 December 2008.
57.In the alternative, and on the Second Agreement and Redemption Decision, judgment should be entered in favour of the plaintiff against the Personal Defendants, the Original Group Companies and the NRGC Companies (as defined in the SoC) jointly and severally for the sum of $700,000.00 together with interest at the rate of 10% from 29 December 2008.
58.Declare that each of the Original Group Businesses are owned by the Original Group Companies on constructive trust for Dawnlite to the extent of the above judgment.”
[10] What interest the plaintiff has in “the Group” as defined in the offer was not determined at trial. The true value of the interest that was being offered is unclear.
[11] The offer of $30,000 in full and final satisfaction of its costs may have been illusory. Its acceptance would have involved forgoing recovery of costs from the other defendants. The costs were to be paid by Samel Holdings Pty Ltd “in its own right and as trustee for the Samel BP Unit Trust, which beneficially owns the Palm Beach business”. Whether Samel still beneficially owned that business at the time of the offer has not been determined. Whether Samel had the financial capacity to pay the costs is uncertain.
[12] In all the circumstances I am unpersuaded that the plaintiff’s rejection of the first offer was unreasonable.
The second offer
[13] The second offer was made by letter headed “Without prejudice save as to costs”. It was in these terms –
“1.Our clients pay the sum of $100,000 to your client.
2.Your client is issued with, and accepts, 715,698 shares in Riverwalk Realty Pty Ltd and 715,698 units in the Riverwalk Realty Unit Trust. These shares and units represent 3.55 percent interest in the group of companies with a value, as of 15 May 2012, of $59,402.93 (being $0.083 per share in accordance with the attached Asset Valuation Model in summary).
3.The parties enter into a subscription deed and shareholders agreement in the terms provided in the attached documents with respect to the shareholding and unit holding issued to your client within 14 days of your client accepting this offer.
4.The parties bear their own costs of the proceedings. In this regard, our clients will forgive [sic] the following entitlement to costs in the proceedings:
(a)The costs order dated 13 July 2010 assessed in the sum of approximately $26,000.
(b)The costs of all four amendments to the plaintiff’s statement of claim to which our clients are entitled pursuant to rule 386 of the Uniform Civil Procedure Rules 1999 which are estimated to be approximately $11,000 (including counsel’s fees).
5.The parties enter into a formal deed of settlement containing comprehensive release clauses.”
[14] Despite the offer being accompanied by a schedule which purported to support the value being assigned to the interest offered, the concerns referred to in paragraph 10 remained. However, in the absence of any meaningful cost/benefit analysis of the provisions of the “attached documents” in counsel’s submissions, I cannot determine the extent of the benefit the plaintiff would have gained from paragraphs 1, 2 and 3 of the offer.
[15] If the offer had simply been for the parties to bear their own costs of the proceeding, it may have been unreasonable of the plaintiff to have rejected it. But the offer had to be considered as a whole.
[16] In all the circumstances, I am unpersuaded that the plaintiff’s rejection of the second offer was unreasonable.
The third offer
[17] The third offer was also made by letter. It extended the time for acceptance of the second offer and was expressed to be a Calderbank[4] offer which would be relied on in relation to costs.
[18] I am unpersuaded that the plaintiff’s rejection of it was unreasonable.
Conclusion
[19] There should be an order that the plaintiff pay the defendants’ costs of and incidental to the proceeding, including reserved costs if any, on the standard basis.
Footnotes
[1] Dawnlite Pty Ltd v Riverwalk Realty Pty Ltd [2013] QSC 243.
[2] Emanuel Management Pty Ltd (in liq) & ors v Foster’s Brewing Group Ltd & ors and Coopers & Lybrand & ors [2003] QSC 299 at [35]-[36] (“Emanuel”).
[3] Emanuel at [38]-[41]; Anderson v AON Risk Services Australia Ltd [2004] QSC 180 at [10]; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233.
[4] Calderbank v Calderbank [1975] 3 All ER 333.