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- Unreported Judgment
Om Business Group Pty Ltd v Nestle Australia Ltd (No 2) QSC 232
SUPREME COURT OF QUEENSLAND
Om Business Group Pty Ltd & Ors v Nestle Australia Ltd & Anor (No 2)  QSC 232
OM BUSINESS GROUP PTY LTD
NESTLE AUSTRALIA LTD
ACN 000 011 316
AUSTRALASIAN FOOD GROUP PTY LTD
ACN 154 314 913
BS No 7109 of 2020
Supreme Court of Queensland at Brisbane
10 September 2021
The question of costs was decided on written submissions.
The plaintiffs pay the defendants’ costs of the proceeding including the application filed on 23 November 2020 to be assessed.
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where the plaintiffs sued the defendants on various causes of action arising from a franchise agreement – where the defendants brought an application to strike out the statement of claim and have a separate issue determined summarily – where the defendants were successful – where the application effectively ended the proceeding – where the defendants sought costs – where the plaintiffs claimed that a costs order would be overly burdensome on them – where the plaintiffs claimed that the defendants should not recover costs of senior counsel on the application – whether costs ought follow the event – whether the defendants ought to have costs of the entire proceeding – whether the question of recovery of senior counsel’s costs ought to be left for assessment
Australian Consumer Law, s 236, s 237
Uniform Civil Procedure Rules 1999, r 681, r 702, r 721
Om Business Group Pty Ltd & Ors v Nestle Australia Ltd & Anor  QSC 183, related
Oshlack v Richmond River Council (1998) 193 CLR 72, followed
Sochorova v Commonwealth of Australia  QCA 152, followed
Wiesac Pty Ltd v Insurance Australia Ltd (No 3)  QSC 69, cited
Written submissions prepared by V Manot, the third plaintiff, for himself and by leave for the other plaintiffs
Written submissions prepared by R Craig QC with MR McRobert for the defendants
V Manot, the third plaintiff, for himself and by leave for the other plaintiffs
Norton Rose Fullbright for the defendants
- The defendants seek costs of the proceeding after successfully striking out much of the plaintiffs’ statement of claim and having a separate question decided summarily in their favour.
- The first defendant, Nestle Australia Ltd, was the franchisor of various businesses selling Movenpick brand ice-cream. The first plaintiff, Om Business Group Pty Ltd (OM), entered into a franchise agreement with Nestle and secured the rights to operate a Movenpick ice-cream store at the Brisbane Emporium in Fortitude Valley. The second plaintiff, Pratap Narsey, guaranteed the obligations of Om to Nestle.
- The business failed and Om, Mr Narsey and Vineet Manot sued Nestle and Australasian Food Group Pty Ltd (AFG), the second defendant, alleging various causes of action, including statutory claims under the Australian Consumer Law. On 23 November 2020, Nestle and AFG filed an application to strike out parts of the statement of claim and to seek a determination, as a separate issue, that the proceeding was barred by reason of s 236(2) and s 237(3) of the Australian Consumer Law.
- On 5 August 2021, I ordered that:
“1. Paragraphs 8, 9 (as to the words “breach of the Franchise Agreement”), 10(d), 10(e) and 10(f) of the statement of claim are struck out.
- The following question shall be heard and determined separately from, and before, any other issues in the proceeding:
Whether the plaintiffs are barred, by reason of sub-sections 236(2) and 237(3) of the Australian Consumer Law, or otherwise, from obtaining any of the relief sought in this proceeding under the Australian Consumer Law.
- The plaintiffs are barred, by reason of sub-sections 236(2) and 237(3) of the Australian Consumer Law from obtaining any of the relief sought in this proceeding under the Australian Consumer Law.
- The parties will be heard on the question of costs.”
- The first order brought to an end claims based on alleged breaches of contract and alleged breaches of fiduciary obligations. Orders 2 and 3 brought to an end the plaintiffs’ claims for relief under the Australian Consumer Law. For all practical purposes, the orders disposed of all claims.
- On 5 August 2021, I gave directions dealing with the question of costs. Those directions were:
“1. The Plaintiffs are to file and serve written submissions on the question of costs by 4pm on 12 August 2021;
- The Defendants are to file and serve written submissions on the question of costs by 4pm on 26 August 2021;
- The parties are at liberty to make application to be heard orally on the question of costs if the parties wish to do so;
- If no application to be heard orally on the question of costs is filed by either party by 4pm on 9 September 2021, the issue of costs will be determined on the written submissions filed by the parties.”
- The plaintiffs’ written submissions were filed on 12 August 2021. The defendants’ written submissions were filed on 26 August 2021. No party has made application to make oral submissions.
The parties’ submissions
- The plaintiffs seek an order that each party bear their own costs. Alternatively, they submit that costs should be capped at $5,000 as anything beyond that sum would be unduly burdensome upon them. They further submit that the costs associated with the defendants briefing senior counsel ought not be allowed as the defendants knew before the hearing of the application that the plaintiffs were self-represented. The thrust of the submission is that briefing senior counsel was overkill.
- The defendants seek costs on the standard basis. They say that the general rule of costs following the event has not been displaced. They submit that the quantification of costs, including whether costs should be capped at $5,000 and including whether costs for senior counsel ought to be allowed, are matters for assessment by the costs assessor.
- The defendants also seek an order that the proceeding be dismissed.
Consideration and determination
- I decline to dismiss the proceeding. No application has been brought for such an order and the plaintiffs have, therefore, not been heard.
- Rule 681 of the Uniform Civil Procedure Rules 1999 (the UCPR) provides:
“681 General rule about costs
- (1)Costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court orders otherwise.
- (2)Subrule (1) applies unless these rules provide otherwise.”
- The rule reflects the established principles explained by McHugh J in his Honour’s often quoted judgment in Oshlack v Richmond River Council:
“67 The expression the ‘usual order as to costs’ embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.
68 As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice.”
- Whether the costs should be capped at $5,000 is not, as the defendants submit, a matter for a costs assessor. If the costs are to be capped in that way, it must be by order of the court. However, impecuniosity of the plaintiffs is the only factor put forward as a reason to cap or deny the defendants their costs. Impecuniosity of a party is not of itself a ground upon which to deny a successful party its costs or to cap the costs. Costs here should follow the event.
- The objection to senior counsel raises at least two issues:
- Should costs of two counsel be allowed?
- If not, should senior counsel appearing alone be allowed?
- A costs assessor must determine whether the costs of two counsel or senior counsel appearing alone are “necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed”. The costs assessor will do that by considering the matters in r 721.
- Rule 721 of the UCPR prescribes the matters which must be taken into account by a costs assessor when assessing costs. That rule provides:
“721 Discretion of a costs assessor
In assessing costs, a costs assessor must consider the following—
- (a)any other fees and allowances payable to the solicitor or counsel for other items in the same proceeding;
- (b)the nature and importance of the proceeding;
- (c)the amount involved;
- (d)the principle involved;
- (e)the interests of the parties;
- (f)the person who is to pay the costs, or the fund or estate out of which the costs are to be paid;
- (g)the general conduct and cost of the proceeding;
- (h)any other relevant circumstances.”
- A dissatisfied party may request the reasons of the assessor for any decision made in the assessment. Rule 742 permits an affected party to seek a review by the court of any decision of the assessor.
- There is insufficient material before me, one way or another, to make a decision as to whether the defendants should recover the costs of two counsel or senior counsel. That determination ought to be left to the costs assessor and, if appropriate, the court on a review.
- Although the proceeding is still on foot, the defendants have successfully defended every claim contained within the statement of claim. It is appropriate then to order that the plaintiffs pay the defendants’ costs of the proceeding, including the application filed on 23 November 2020 to be assessed.
- The plaintiffs pay the defendants’ costs of the proceeding including the application filed on 23 November 2020 to be assessed.
Om Business Group Pty Ltd & Ors v Nestle Australia Ltd & Anor  QSC 183.
Uniform Civil Procedure Rules 1999, r 681.
Defendants’ written submissions, paragraph .
(1998) 193 CLR 72 at 97.
Sochorova v Commonwealth of Australia  QCA 152 at .
Mr Craig QC appeared with Mr McRobert.
Uniform Civil Procedure Rules 1999, r 702.
As to the procedure generally, see Wiesac Pty Ltd v Insurance Australia Ltd (No 3)  QSC 69.
- Published Case Name:
Om Business Group Pty Ltd & Ors v Nestle Australia Ltd & Anor (No 2)
- Shortened Case Name:
Om Business Group Pty Ltd v Nestle Australia Ltd (No 2)
 QSC 232
10 Sep 2021