Ultra Tune Properties (Qld) No 2 Pty Ltd v DNR1 Pty Ltd (No 2)
[2021] QSC 267
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- Unreported Judgment
- Ultra Tune Properties (Qld) No 2 Pty Ltd v DNR1 Pty Ltd (No 2)[2021] QSC 267
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Ultra Tune Properties (Qld) No 2 Pty Ltd v DNR1 Pty Ltd (No 2)[2021] QSC 267
Ultra Tune Properties (Qld) No 2 Pty Ltd v DNR1 Pty Ltd (No 2)[2021] QSC 267
SUPREME COURT OF QUEENSLAND
CITATION: | Ultra Tune Properties (Qld) No 2 Pty Ltd & Anor v DNR1 Pty Ltd (No 2) [2021] QSC 267 |
PARTIES: | ULTRA TUNE PROPERTIES (QLD) NO 2 PTY LTD ACN 093 558 715 (first plaintiff) AND AUSTRALIAN MECHANICAL REPAIRS PTY LTD ACN 601 544 414 (second plaintiff) v DNR1 PTY LTD AS TRUSTEE FOR THE DALTON FAMILY TRUST (defendant) |
FILE NO: | BS 12828 of 2020 |
DIVISION: | Trial Division |
PROCEEDING: | Civil (Commercial List) |
DELIVERED ON: | 11 November 2021 |
DELIVERED AT: | Brisbane |
HEARING DATE: | On the papers |
JUDGE: | Bradley J |
ORDER: | The defendant’s application to vacate or vary the costs order made on 30 August 2021 is dismissed. |
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – RELEVANT CONSIDERATIONS GENERALLY – where the court gave judgment for the defendant and ordered the plaintiffs to pay the defendant’s costs of the proceeding on the standard basis – where the defendant now seeks an order for indemnity costs – whether the plaintiffs’ conduct in the proceedings and refusal to accept an offer of settlement was ‘plainly unreasonable’ so as to justify an order for indemnity costs Uniform Civil Procedure Rules 1999 (Qld) r 361(2), r 681(1) Baygol Pty Ltd v Foamex Polystyrene Pty Ltd [2005] FCA 1089, followed Beardmore v Franklins Management Services Pty Ltd [2003] 1 Qd R 1, [2002] QCA 60, cited Calderbank v Calderbank [1976] Fam 93, considered Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, cited Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435, applied Reeves v O'Riley [2013] QCA 285, cited Tector v FAI General Insurance Company Ltd [2001] 2 Qd R 463, [2000] QCA 426, cited |
COUNSEL: | J A S Ford for the plaintiffs C J Ryall for the defendant |
SOLICITORS: | Hone Legal & Conveyancing for the plaintiffs John Seccull Law for the defendant |
- [1]On 30 August 2021, the court gave judgment for the defendant on the plaintiffs’ claim and ordered the plaintiffs to pay the defendant’s costs of the proceeding. Reasons for the decision were published.[1]
- [2]Later that day, the defendant sought an opportunity to make submissions on the costs order. The plaintiffs replied, indicating they did not consent to that course.
- [3]This proceeding is on the Commercial List. On 12 September 2021 the parties advised that they were content for the court to decide whether to vacate the costs order made on 30 August 2021 and make a different costs order on the written material and submissions without the parties attending. In the circumstances, I am satisfied it is appropriate to decide the question without an oral hearing to ensure the just, efficient and expeditious disposal of the case.[2]
- [4]On 14 September 2021, the court made directions for each of the parties to file and serve short written submissions on the question of costs. The defendant filed submissions on 21 September 2021 and the plaintiffs on 29 September 2021.
- [5]These reasons address the matters raised in those written submissions.
Principles
- [6]It is common ground that the plaintiffs should be ordered to pay the defendant’s costs of the proceeding, in accordance with r 681(1) of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR). That order has been made. However, the defendant seeks to vacate that order and replace it with an order that the plaintiffs pay those costs to be assessed on the indemnity basis or on that basis from 7 June 2021, when it made a written offer to settle the proceeding.
- [7]Where a party has acted in the litigation in a way that is “plainly unreasonable”, so as to have caused another party to incur increased costs, the court may redress the position by allowing the affected party to recover its costs on the more generous basis.[3] Unreasonableness can include the imprudent refusal of an offer to compromise.[4] In such cases, other things being equal, the court may decide an award of costs on the standard basis would be insufficient to protect the successful party and an indemnity costs order is appropriate as a “means of achieving a fairer result”.
- [8]Neither party provided any indication of the likely difference between the amount recoverable on the standard and on an indemnity basis.
Conduct in the proceeding
- [9]The defendant accepts that the first plaintiff’s primary contract claim was “arguable”. It submits that the alternative contract case was “not as meritorious” and “it is open to find” the alternative case was “one that relevantly had only a ‘remote prospect’ of success”.
- [10]The defendant also submits that the first plaintiff’s additional claims based on promissory estoppel and misleading or deceptive conduct alleged a detriment and claimed statutory compensation for a loss that the first plaintiff knew or ought to have known would have been suffered by its parent company, rather than by the first plaintiff itself.
- [11]The second plaintiff sought relief in the proceeding for the loss of a sale of its business, which it contended would result if the defendant was not bound by a lease or estopped from denying a lease of the premises to the first plaintiff. Amongst the documents tendered at the trial were some that showed the sale had been completed in about November 2020. The defendant submits that the second plaintiff “proceeded in a manner inconsistent with facts they knew or ought to have known about.”
- [12]The defendant submits that by continuing with these alternative and additional claims, the plaintiffs “caused a substantial increase in the cost of the proceedings.”
- [13]As to these submissions the following is relevant.
- [14]The trial took place over two days in early August 2021. The openings and the evidence of the witnesses occupied one day. No witness was called to give evidence that went solely to the second plaintiff’s claim or to the first plaintiff’s statutory claim for compensation. Each party produced written closing submissions and the court sat for two hours on the afternoon of the second day for addresses by Counsel.
- [15]The first plaintiff’s alternative contract case was a different way of characterising the same evidence to advance an alternative legal argument that a binding contract had been made between the first plaintiff and the defendant. It had no measurable effect on the conduct of the trial, did not lead to any wider scope of disclosure, and occupied a small part of the written and oral submissions. No submissions were made in support of the second plaintiff’s claim.
- [16]In the circumstances, it is not possible to conclude that the plaintiffs’ persistence with these alternative and additional claims caused the defendant to incur increased costs in the proceeding.
Failure to appear and respond to correspondence
- [17]The defendant also complains that the plaintiffs failed to appear at mentions on 25 February, 20 May and 28 May 2021. It also complains that between December 2020 and February 2021, the plaintiffs’ solicitor did not respond to its solicitor’s correspondence.
- [18]The failure of the plaintiffs to appear at the 20 May 2021 mention resulted in the 28 May mention, at which the plaintiffs again failed to appear. It seems the plaintiffs’ solicitor was intending to appear by telephone. On 20 May, he had not sought leave to do so, and on 28 May, when he had leave, he did not succeed in using the relevant technology. The defendant would recover its costs of both mentions under the usual order. On each occasion, the defendant’s counsel appeared by telephone. There is nothing to indicate the usual order would be insufficient to protect the defendant or produce unfairness in this respect.
- [19]As to the earlier period, it is regrettable whenever a legal practitioner lacks the courtesy to respond to another practitioner’s correspondence. Alas, discourtesy alone is not a basis for an award of indemnity costs.
Offer of settlement
- [20]The defendant’s offer was sent about two and a half weeks after the proceeding was set down for trial and a little less than two months before the trial was to occur.
- [21]In it, the defendant’s solicitor raised an allegation that the proceeding had been commenced “purely” for an ulterior purpose, not for any legitimate purpose, and was an abuse of process. In the letter, these allegations were said to be the basis for the defendant to seek indemnity costs of the proceeding.
- [22]The defendant’s offer was that the proceeding be discontinued by consent and the plaintiffs pay the defendant’s costs of the proceeding to be agreed or assessed on the standard basis. It was said to be made pursuant to the principles in Calderbank v Calderbank.[5] It was open for 28 days. It was followed by this statement:
“In the event that this offer is not accepted we will rely on this letter in any application for indemnity costs.”
- [23]The defendant’s offer was not made under part 5 of the UCPR. Had it been made under those rules, the defendant would not have been entitled to indemnity costs, but only to its costs on the standard basis from the date its offer was served - and the defendant would have had to pay the plaintiffs’ costs on the standard basis up to that date.[6]
- [24]In the context of compromise, the purpose of a costs order is to encourage resolution of disputes without the necessity of a trial.[7] This is so whether the offer is made under part 5 of the UCPR or in accordance with the Calderbank principles.
- [25]As Tamberlin J observed in Baygol Pty Ltd v Foamex Polystyrene Pty Ltd:
“A distinction has been drawn in the authorities between a genuine offer of a realistic compromise, and a demand to capitulate in circumstances where the case has some prospect of success. The question posed is whether the offer advanced by the party is designed merely to trigger costs sanctions, in which case it would not be treated as a genuine offer of compromise, or whether it is an offer of a significant benefit, in which case it could be so treated. A refusal to acknowledge any substance in the opposing party's case will usually not be sufficient of itself to warrant the making of a costs award on a solicitor client basis.”[8]
- [26]The defendant did not offer to pay any sum to the plaintiffs or even to agree to the discontinuance of the proceeding with no order as to costs. The only element of compromise was the offer to forego claiming indemnity costs.
- [27]At that point in time, the defendant had no entitlement to costs on that more generous basis. In the context of the letter, the defendant’s advice that it would rely on the letter of offer “in any application for indemnity costs” might be understood as referring to the asserted right to such costs on the basis that the plaintiffs were engaged in an alleged abuse of process. No such case was put by the defendant at the trial.
- [28]Although in the form of an offer of compromise, the defendant’s offer was not a genuine offer and proposed no real compromise. The defendant’s offer may be fairly read as one “designed merely to trigger costs sanctions”. The plaintiffs’ decision not to accept the offer, at that time, could not fairly be considered unreasonable.[9]
- [29]As the plaintiffs concede, the defendant is entitled to an order for its costs of the proceeding on the standard basis. That order has been made. I am not persuaded it should be vacated or altered in any way.
Footnotes
[1]Ultra Tune Properties (Qld) No 2 Pty Ltd & Anor v DNR1 Pty Ltd [2021] QSC 215.
[2]See: Practice Direction No 3 of 2002, [18](a).
[3]Tector v FAI General Insurance Company Ltd [2001] 2 Qd R 463, 464 [5] (McMurdo P, Pincus JA and White J).
[4]Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, 233 (Sheppard J).
[5][1976] Fam 93.
[6]r 361(2).
[7]Beardmore v Franklins Management Services Pty Ltd [2003] 1 Qd R 1 at [106] (Ambrose J).
[8][2005] FCA 1089 at [12].
[9]Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at [25], cited with approval in Reeves v O'Riley [2013] QCA 285 at [4] (Holmes and Muir JJA and Mullins J).