PFJV Pty Ltd v Bartter Enterprises Pty Ltd (No 2)
[2024] QSC 145
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- Unreported Judgment
- PFJV Pty Ltd v Bartter Enterprises Pty Ltd (No 2)[2024] QSC 145
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PFJV Pty Ltd v Bartter Enterprises Pty Ltd (No 2)[2024] QSC 145
PFJV Pty Ltd v Bartter Enterprises Pty Ltd (No 2)[2024] QSC 145
SUPREME COURT OF QUEENSLAND
CITATION: | PFJV Pty Ltd v Bartter Enterprises Pty Ltd (No 2) [2024] QSC 145 |
PARTIES: | PFJV PTY LTD (ACN 614 586 4444) AS TRUSTEE FOR THE DONNYBROOK RAINBOW TRUST AND THE DONNYBROOK KUIKENS UNIT TRUST (Plaintiff) v BARTTER ENTERPRISES PTY LTD (ACN 000 451 374) (Defendant) |
FILE NO/S: | BS 3716 of 2019 |
DIVISION: | Trial Division |
PROCEEDING: | Trial |
DELIVERED ON: | 10 July 2024 |
DELIVERED AT: | Brisbane |
HEARING DATE: | On the papers |
JUDGE: | Bowskill CJ |
ORDER: | The plaintiff pay the defendant’s costs of the proceeding, including reserved costs and including the costs of any past applications for which no contrary orders were made, with such costs to be assessed on the standard basis. |
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS – INFORMAL OFFERS AND CALDERBANK LETTERS – UNREASONABLE REFUSAL OF OFFER – where the plaintiff’s claim was dismissed following a trial – where the defendant made Calderbank offers to settle on three prior occasions – whether the plaintiff’s rejection of the offers was unreasonable, such as to justify departure from the usual rule that the unsuccessful plaintiff pay the defendant’s costs on the standard basis Smith v Wessling-Smith [2017] QSC 189 Springfield City Group Pty Ltd v Pipe Networks Pty Ltd (No 2) [2022] QSC 299 |
COUNSEL: | G A Thompson KC and A G Psaltis for the plaintiff G A Sirtes SC and A Smorchevsky for the defendant |
SOLICITORS: | Colin Biggers & Paisley for the plaintiff Prandium Legal for the defendant |
- [1]On 6 June 2024, I delivered judgment in this matter: PFJV Pty Ltd v Bartter Enterprises [2024] QSC 114. The plaintiff’s claim was dismissed. The parties were invited to make submissions in relation to the costs of the proceeding, with the question of costs to be determined on the papers, having regard to those submissions.
- [2]The plaintiff accepts it must pay the defendant’s costs of the proceeding, including reserved costs. The issue to be determined is the basis on which those costs should be assessed – the standard basis, as the plaintiff submits, or the indemnity basis, as the defendant submits, having regard to various settlement offers made by the defendant.
- [3]This proceeding was commenced on 8 April 2019. On 21 May 2019, before a defence had been filed, the defendant made an offer to pay the plaintiff $155,954.73, with no order as to costs. The context of that offer is explained in the affidavit of Mr McKeough, the solicitor for the defendant, sworn on 14 June 2024. Following the closure of the Wulkuraka plant, the defendant found itself in dispute with a number of broiler chicken growers in south-east Queensland. In late 2017 and early 2018, it engaged in mediation and made offers to resolve those disputes by distribution of an overall settlement sum of $1.5 million, apportioned between the various growers. If the plaintiff had accepted the offer made in that context (which of course it did not), it would have received $155,954.73. When this proceeding was commenced, the defendant made a Calderbank[1] offer to settle for that amount, which was rejected. This offer did not foreshadow any application for costs on the indemnity basis.
- [4]Almost three years later, on 9 March 2022, after a failed attempt at mediation, the defendant made a further Calderbank offer to settle the proceeding on the basis that the proceeding be dismissed, with each party paying its own costs. It was expressly said in the letter setting out this offer that the offer would be relied upon in support of an application that the plaintiff pay costs on an indemnity basis.
- [5]Three months’ later, on 10 June 2022, a further offer was made, this time to resolve the dispute on the basis that the proceeding be dismissed, and the plaintiff pay the defendant $300,000 on account of its costs to that point (which were in fact said to be more than $500,000, as at March and June 2022). Again, it was expressly said that the offer would be relied upon to seek indemnity costs.
- [6]Both those offers were rejected by the plaintiff. No further offers were made by the defendant. The proceeding continued, and the trial ultimately took place in March 2024.
- [7]The relevant principles in relation to Calderbank offers were summarised by Bond J in Springfield City Group Pty Ltd v Pipe Networks Pty Ltd (No 2) [2022] QSC 299 at [9]. His Honour identified the following as the relevant propositions, which I adopt:
“First, the usual rule is that where the Court orders the costs of one party to litigation to be paid by another party, the order is for assessment of those costs on the standard basis.
Second, the Court will depart from the usual rule where the circumstances of the case warrant that course.
Third, one feature which may justify a departure from the usual rule is the rejection of a Calderbank offer to compromise. However, it is wrong to think that an offeree’s rejection of a Calderbank offer gives rise to a presumption that the offeree should pay the offeror’s costs on an indemnity basis if the offeree obtains a less favourable result than contained in the offer. Rather, the correct approach is to consider whether the rejection of the Calderbank offer, in all the circumstances, justifies a departure from the usual rule.
Fourth, the balance between the competing policy considerations of, on the one hand, appropriately encouraging settlement and, on the other, not discouraging potential litigants from bringing their disputes to the courts, is found by applying a test of ‘reasonableness’. The policy rationale for requiring the offeree to indemnify the offeror for costs incurred after the offeree’s unreasonable rejection of an offer is that, from the time of the unreasonable rejection, notionally the real cause and occasion of the litigation is the unreasonable attitude adopted by the offeree.
Fifth, deciding the critical question of whether the offeree’s rejection of the offer is unreasonable in all the circumstances will always involve matters of judgment and impression. However, the discretion as to costs must be exercised judicially and is subject to review in accordance with the principles set out in House v R (1936) 55 CLR 499 at 505. Without being exhaustive concerning the considerations which should be taken into account, a court should ordinarily have regard to at least the following matters:
- the stage of the proceeding at which the offer was received;
- the time allowed to the offeree to consider the offer;
- the extent of the compromise offered;
- the offeree’s prospects of success, assessed as at the date of the offer;
- the clarity with which the terms of the offer were expressed; and
- whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it.”
- [8]The plaintiff’s rejection of the first offer, in May 2019, cannot be described as unreasonable in the circumstances. The offer was made before the defendant had filed a defence, let alone any disclosure in the proceeding.
- [9]As to the later offers, the plaintiff submits it was not unreasonable, or imprudent, not to accept the offers because, at the time they were made (March and June 2022), the plaintiff was still agitating for further disclosure, and did not obtain that further disclosure until after an order was made in December 2022. As the plaintiff submits, that further disclosure provided context to the board papers from July and August 2015 (already disclosed), which had referred to the potential for closure of the SEQ operations, including that the initial proposal to close the Wulkuraka plant was not subsequently pursued until at least late 2016. Prior to receiving disclosure of this material, and as at March and June 2022, the documents that had been disclosed painted a different picture, in terms of closure of the plant. The parties did not exchange their evidence until quite some time later.[2] In addition, some of the material disclosed prior to December 2022 was the subject of extensive redaction, which lead to further interlocutory disputes (and some “reduced redaction”[3]). Indeed, the parties were still arguing about disclosure in February 2024, just a month before the trial commenced – in circumstances that resulted in orders for the defendant to make further disclosure at that time.
- [10]The plaintiff also submits that the March and June 2022 offers cannot be described as genuine compromises, as neither offer represented significant compromise on the part of the defendant at the time they were made. That is accepted, in so far as the June 2022 offer is concerned (because that offer in essence required the plaintiff to abandon its claim and pay the defendant’s costs, or at least a substantial portion of them). The March 2022 offer involved a greater level of compromise, given the amount of costs the defendant had already incurred by that time (said to be just over $500,000) – but was overtaken by the June 2022 offer a short time later.
- [11]Importantly, the time at which the reasonableness of not accepting an offer is to be assessed is the time of the offer, not later with hindsight.[4] In hindsight – with the findings made following a trial, having regard to all the evidence, documentary and oral – the offer of March 2022 was a good outcome. But, as at March 2022 (and for that matter June 2022), there was still an ongoing fight about disclosure – which resulted in important further documents being disclosed after December 2022 – and the parties had not yet put on their evidence. The parties’ cards were not on the table, so to speak. This is not a case where, in my view, the plaintiff’s claim was hopeless or obviously doomed to fail – it was a strongly contested commercial dispute in respect of which the plaintiff ultimately failed to prove its claim.
- [12]In all the circumstances, I am not persuaded that it can be said to have been unreasonable – in the sense of justifying an award of indemnity costs from that point on – for the plaintiff to reject an offer to “walk away” from its claim, as at March 2022; or to accept dismissal of its claim together with payment of a substantial sum by way of costs to the defendant, as at June 2022. That being the case, I am not satisfied that there is a basis to depart from the usual rule.
- [13]The appropriate order is that the plaintiff pay the defendant’s costs of the proceeding, including reserved costs and including the costs of any past applications for which no contrary orders were made, with such costs to be assessed on the standard basis.