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Timberwolf Planting Pty Ltd v Forrester[2024] QSC 254

Timberwolf Planting Pty Ltd v Forrester[2024] QSC 254

SUPREME COURT OF QUEENSLAND

CITATION:

Timberwolf Planting Pty Ltd v Forrester [2024] QSC 254

PARTIES:

TIMBERWOLF PLANTING PTY LTD

(respondent/plaintiff)

v

ANDREW FORRESTER

(applicant/first defendant)

ROBYN KELLY

(applicant/second defendant)

DIRTY PLANTING PTY LTD

(applicant/third defendant)

FILE NO/S:

BS 5714 of 2022

DIVISION:

Trial division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

25 October 2024

DELIVERED AT:

Brisbane

HEARING DATE:

6 June 2024

JUDGE:

Cooper J

ORDER:

  1. The plaintiff is to pay the defendants’ costs of the discontinued proceeding from and including 17 April 2024 up to and including 3 May 2024.
  2. The defendants’ costs of the discontinued proceeding up to and including 3 May 2024, including the costs referred to in paragraph 3 of the orders of Muir J dated 3 May 2024, are to be assessed on the standard basis if not agreed.
  3. The plaintiff is to pay the defendants’ costs the subject of paragraphs 1 and 2 of these orders and paragraph 3 of the orders of Muir J dated 3 May 2024 within 28 days of the amount of those costs being agreed or assessed.
  4. The defendants are to pay 90% of the plaintiff’s costs of and incidental to the hearing on 6 June 2024 to be assessed on the standard basis if not agreed.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – PARTICULAR CASES – UNREASONABLE CONDUCT OR DELINQUENCY RELATING TO PROCEEDINGS – where the plaintiff commenced the proceeding in the District Court in 2019 – where the defendants complained that the plaintiff was dilatory in providing adequate disclosure and in particularising its loss – where the proceeding was subsequently transferred to the Supreme Court in 2022 – where a trial was listed to commence in June 2024 – where the plaintiff discontinued the proceeding in May 2024 – where the defendants argued that the plaintiff’s conduct had unduly prolonged the proceeding and caused them to incur costs which they should not have to bear – where the plaintiff argued the delay was also partly caused by the defendants’ inadequate disclosure which prevented the plaintiff from properly particularising its loss and the defendants’ own delay in providing an expert report – whether the plaintiff’s conduct of the proceeding was so unreasonable so as to warrant an order that it pay the defendants’ costs on the indemnity basis

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 made an offer to settle the proceedings and to pay the defendants’ costs on the standard basis in April 2024 – where the defendants rejected the plaintiff’s offer and instead made a counteroffer to settle which the plaintiff did not accept – where the plaintiff submitted that its offer was reasonable and had it been accepted, the defendants would not have incurred further costs after April 2024 – whether the defendants acted unreasonably in not accepting the plaintiff’s offer such that no costs order should be made in favour of the defendants after the date of the offer

Uniform Civil Procedure Rules 1999 (Qld), r 307 r 702, r 703

Fairfield Services Pty Ltd (in liq) v Leggett [2020] QSC 183 (2020) 5 QR 50, cited
Fick v Groves (No 2) [2010] QSC 182, considered
Robinson v Laws [2001] QCA 122, cited
Sorrentino Designs Pty Ltd v McKenna [2024] QSC 48, cited

Tector v FAI General Insurance Co Ltd [2001] 2 Qd R 463, cited

Zelcliff Pty Ltd v Container Exchange (Qld) Ltd [2022] QSC 239 [2022] 45 QLR, cited

COUNSEL:

LS Reidy for the applicant/defendants

AC Harding for the respondent/plaintiff

SOLICITORS:

Holding Redlich Lawyers for the applicant/defendants

Wotton Kearney Lawyers for the respondent/plaintiff

Introduction

  1. [1]
    The plaintiff provides planting services to landscapers and forestry companies.
  2. [2]
    The first defendant, Mr Forrester, was employed by the plaintiff for a period of almost two years; first as its general manager and later as its chief executive officer.  During that same period the second defendant, Ms Kelly, was also employed by the plaintiff; first as its national operations manager and then as its general manager once Mr Forrester became chief executive officer.  Both Mr Forrester and Ms Kelly resigned their employment with the plaintiff with effect from 18 December 2018.
  3. [3]
    On 20 September 2019, the plaintiff commenced this proceeding in the District Court against Mr Forrester, Ms Kelly and Dirty Planting Pty Ltd, a company they had incorporated after ceasing their employment with the plaintiff and through which they commenced operating their own planting business. 
  4. [4]
    The plaintiff claimed damages for breach of contract, damages for conversion and orders for restitution against both Mr Forrester and Ms Kelly.  Against the company, the plaintiff sought damages for inducing Mr Forrester and Ms Kelly to breach their contracts of employment.  The plaintiff also sought injunctive relief which would have restrained the defendants from operating their new planting business until 18 December 2020.
  5. [5]
    Central to the plaintiff’s case were cascading restraint of trade provisions in the contracts of employment signed by Mr Forrester and Ms Kelly when they first commenced working for the plaintiff.  The defendants denied that Mr Forrester or Ms Kelly had breached their employment contracts, or that they were subject to any restraint after resigning their employment with the plaintiff.  They maintained that they had each signed separate contracts of employment when they changed their positions at the plaintiff, and those later contracts of employment did not contain any restraint.  Further, they pleaded that the restraints provided for in the initial contracts of employment went beyond what was reasonable to protect any legitimate interest of the plaintiff.
  6. [6]
    The primary issues in dispute in the proceeding were:
    1. whether the restraints, or any part of them, were enforceable and, if so, the duration of the restraints;
    2. whether either of the defendants breached the restraints;
    3. if any breach was established, the quantum of the plaintiff’s loss and damage.
  7. [7]
    The proceeding was eventually transferred to this court and continued until 3 May 2024, when Muir J made orders that:
    1. the plaintiff be given leave to discontinue the proceeding against the defendants;
    2. the plaintiff pay the defendants’ costs of the discontinued proceeding including any reserved costs up to and including 16 April 2024;
    3. the basis of assessment of the costs to be paid by the plaintiff be reserved;
    4. costs from and including 17 April 2024 be reserved.
  8. [8]
    Those orders were made in circumstances where a trial had been listed to commence on 3 June 2024.
  9. [9]
    I now have three issues before me for determination:
    1. whether the plaintiff’s conduct of the proceeding was such as to warrant an order that it pay the defendants’ costs on the indemnity basis;
    2. having regard to an offer to settle which the plaintiff made before applying for leave to discontinue the proceeding, whether the plaintiff should be ordered to pay the defendants’ costs from 17 April 2024;
    3. whether an order should be made limiting the time in which the plaintiff is required to pay the defendants’ costs.
  10. [10]
    For the reasons which follow, I have concluded that:
    1. the plaintiff’s conduct of the proceeding was not so unreasonable as to warrant an order that it pay the defendants’ costs on the indemnity basis;
    2. the defendants did not act unreasonably in rejecting the plaintiff’s offer of settlement and should not be deprived of their costs from the expiry of the offer up to the discontinuance on 3 May 2024;
    3. the plaintiff should be ordered to pay the defendants’ costs up to 3 May 2024 within 28 days of the amount of those costs being agreed or assessed.

Relevant principles

  1. [11]
    A party who discontinues a proceeding is liable to pay the costs of the party against whom the proceeding is discontinued up to the date of the discontinuance: see r 307(1) of the Uniform Civil Procedure Rules 1999 (UCPR).  As the plaintiff discontinued the proceeding with the court’s leave, the court has a discretion to make the order for costs it considers appropriate: r 307(2).  Unless the UCPR or an order of the court provides otherwise, costs must be assessed on the standard basis: r 702.  However, the court may order the assessment of costs on the indemnity basis: r 703.
  2. [12]
    Although the power is discretionary, the ordinary rule is that costs ordered to be paid in adversarial litigation are to be assessed on the standard basis.  That ordinary rule should only be departed from, and an order made for costs to be assessed on the indemnity basis, where the conduct of the party against whom the order is sought is plainly unreasonable.[1]
  3. [13]
    Where a proceeding is discontinued before trial the court should not, in determining the question of costs, seek to assess the merits of a party’s case by trying a hypothetical action.[2]  In the present application, the defendants did not seek to establish that the plaintiff’s conduct was unreasonable based upon an assessment of the merits of its claims.  Instead, the defendants submitted that the plaintiff had acted unreasonably in delaying the progress of its own proceeding in breach of the implied undertaking in r 5(3) of the UCPR to proceed in an expeditious way.[3] 
  4. [14]
    In Fick v Groves (No 2),[4]  Applegarth J held that undue prolongation of a proceeding in contravention of the implied undertaking justified an award of indemnity costs, that being an appropriate sanction for the failure by the plaintiffs in that proceeding to proceed in an expeditious way: see r 5(4).  In that case, Applegarth J found that the plaintiffs:
    1. were responsible for excessive delay and undue prolongation of the proceeding;
    2. did not attempt to comply with the rules relating to the engagement of experts;
    3. necessitated numerous interlocutory applications to be brought by the defendants;
    4. failed to provide timely disclosure;
    5. were to blame for the delays and complications in the proceeding;
    6. caused the defendants to incur substantial costs in interlocutory proceedings, and because of the need to obtain court supervision, which costs the defendants should not have been required to bear.
  5. [15]
    The question on this application is whether, by its conduct, the plaintiff delayed and unnecessarily prolonged the proceeding in contravention of its implied undertaking.  This requires an assessment of the effect which the plaintiff’s conduct had upon the course of the proceeding and whether this caused the defendants to incur costs which they should not be required to bear.

The course of the proceeding

  1. [16]
    The early stages of the proceeding were unremarkable.  The plaintiff filed the claim and statement of claim on 20 September 2019.  It served those documents on the defendants on 1 October 2019.  The defendants filed their notice of intention to defend on 29 October 2019.  The plaintiff filed its reply on 14 November 2019.  The plaintiff then served its list of documents on the defendants on 12 December 2019.
  2. [17]
    Although pleadings had closed, the parties soon exchanged correspondence about the form of the plaintiff’s pleadings.  On 10 January 2020, the defendants’ solicitors (Holding Redlich) sent a letter pursuant to r 444 to the solicitors who were then acting for the plaintiff (Gifford Legal).  That letter complained about a lack of particulars in the statement of claim.  It also identified paragraphs in both the statement of claim and in the reply that the defendants believed should be struck out.  The r 444 letter required a response by 24 January 2020. 
  3. [18]
    Gifford Legal did not respond pursuant to r 445 within the time nominated.  Their response was sent on 3 February 2020.  Although that response refuted most of the defendants’ criticisms of the plaintiff’s pleadings, it stated that the plaintiff intended to file an amended statement of claim within seven days (that is, by 10 February 2020) which would provide further particulars of its claim, including the claim for damages.
  4. [19]
    The plaintiff did not file an amended statement of claim within the time it had nominated.  There was further correspondence exchanged between the solicitors.  Holding Redlich queried more than once when they could expect to receive the amended statement of claim and Gifford Legal indicated that it would be filed within a short period.  Gifford Legal eventually explained that counsel had been delayed in amending the statement of claim. 
  5. [20]
    The plaintiff filed its amended statement of claim on 15 May 2020, about three months after it had first indicated it would do so.  In pleading its loss in the amended statement of claim, the plaintiff stated that further particulars of the calculation of its loss would be provided following the completion of interlocutory steps, including the receipt of expert accounting evidence. 
  6. [21]
    The defendants filed their amended defence on 24 June 2020. 
  7. [22]
    The parties then provided further disclosure.  The plaintiff delivered an updated list of documents on 20 July 2020.  The defendants delivered lists of documents on 21 July 2020 and 28 September 2020.
  8. [23]
    On 16 October 2020, Gifford Legal wrote to Holding Redlich.  That letter stated that documents disclosed by the defendants indicated they had canvassed, approached or accepted an approach from customers of the plaintiff in breach of the restraints.  It sought confirmation that all documents relevant to this issue had been disclosed by the defendants.  The letter also complained that the defendants had improperly redacted documents which had been disclosed, purportedly on the basis of commercial sensitivity.  It gave an assurance that the plaintiff had been made aware of its obligations not to use documents obtained through disclosure for a collateral purpose and requested that the defendants provide unredacted copies of all disclosed documents.
  9. [24]
    On 28 October 2020, Holding Redlich wrote to Gifford Legal.  The letter complained that the plaintiff had failed to disclose relevant documents and failed to provide particulars of its loss.  It stated that the defendants reserved their right to bring an application in respect of those matters.  The letter provided no response to the matters raised about the defendants’ disclosure in the letter of 16 October 2020.  It stated that the defendants would be open to attending a mediation but that they did not see any use in that process until the plaintiff had addressed the complaints about its disclosure and the particulars of its loss.
  10. [25]
    Holding Redlich sent an email to Gifford Legal on 10 November 2020.  That email complained that there had been no response to its letter of 28 October 2020.  It stated that the defendants required a response to the concerns set out in that letter by 13 November 2020, failing which Holding Redlich would seek instructions to bring an application in respect of those matters.
  11. [26]
    On 13 November 2020, Gifford Legal sent a response to Holding Redlich which addressed the defendants’ complaints about the plaintiff’s disclosure and particulars of its loss.  As part of that response, the plaintiff delivered a further updated list of documents.  The letter stated that the plaintiff had particularised its loss to the extent it was able to without the defendants having disclosed documents showing the revenue which they had earned from the plaintiff’s customers.  It referred to the need for the plaintiff to obtain expert accounting evidence but stated that the plaintiff was seeking to avoid that expense if possible.  The letter also noted the defendants’ failure to address the complaints raised in the letter of 16 October 2020.  It advised that the plaintiff still had concerns about the defendants’ attempts at disclosure but was willing to leave those matters aside if the defendants agreed to participate in a mediation.
  12. [27]
    On 27 November 2020, the plaintiff served a further updated list of documents disclosing further documents, including financial documents.
  13. [28]
    On 3 December 2020, Holding Redlich wrote to Gifford Legal in response to the correspondence on 13 November and 27 November 2020.  The letter maintained that the plaintiff’s disclosure and its particulars of loss were still deficient.  It demanded that the plaintiff serve further and better particulars of its loss and a further updated list of documents within 14 days.
  14. [29]
    Gifford Legal responded to Holding Redlich on 15 December 2020.  The letter stated that the plaintiff’s complaints about the defendants’ disclosure had not been satisfactorily addressed.  It asserted that the defendants had breached their disclosure obligations by providing redacted copies of invoices relating to work performed for the plaintiff’s customers and by providing invoices for a period which was shorter than the contractual restraint period.  It stated that the defendants’ continued refusal to comply with their disclosure obligations was preventing the plaintiff from providing proper particulars of its loss.
  15. [30]
    That appears to have remained the position until 16 April 2021 when Gifford Legal wrote to Holding Redlich.  That letter referred to the earlier exchange of complaints about the parties’ respective disclosure obligations and the plaintiff’s particulars of its loss.  Rather than re-ventilate those complaints, the letter called on the defendants again to consent to participate in a mediation.
  16. [31]
    On 19 April 2021, Holding Redlich responded to Gifford Legal’s letters of 15 December 2020 and 16 April 2021.  The letter stated that the defendants had disclosed all documents relevant to the issue of solicitation of the plaintiff’s customers.  Further, the defendants refused to provide invoices in an unredacted form on the basis that the prices charged to customers was not relevant to the claim and the defendants believed that information would be misused by the plaintiff.  The letter went on to request that the plaintiff respond to the matters raised in the letter of 3 December 2020, stating that once that had been done the parties would be ready to file a request for a trial date.  It stated that the defendants’ position on mediation remained the same – the plaintiff would need to address the outstanding issues with respect to its disclosure and particulars of its loss before that process could occur.  As they had done six months earlier (see [24] above), the defendants again reserved their right to bring an application for further disclosure and particulars of loss if the plaintiff failed to comply with its obligations.
  17. [32]
    Little then appears to have happened for six months.
  18. [33]
    On 4 November 2021, Holding Redlich wrote to Gifford Legal.  The letter repeated the defendants’ complaints about the plaintiff’s disclosure and its particulars of loss.  In that letter the defendants:
    1. asserted that the plaintiff had failed to progress the proceeding in an expeditious manner and was in breach of r 5;
    2. refused to entertain any request to participate in a mediation until the plaintiff provided a report on its loss prepared by an independent expert;
    3. attached a request for trial date and stated that if the plaintiff did not sign and return that request within 21 days, Holding Redlich was instructed to apply to the court without further notice to dispense with that requirement.
  19. [34]
    Gifford Legal responded to Holding Redlich by letter dated 12 November 2021.  The letter stated that, given the defendants’ refusal to agree to attend a mediation, the plaintiff would be taking steps to prepare for trial, including:
    1. applying for further disclosure by the defendants and for the removal of improper redactions from the defendants’ disclosure;
    2. applying for declarations to the effect that the defendants were deemed to have admitted certain paragraphs of the amended statement of claim;
    3. applying for a court-ordered mediation;
    4. engaging an expert to provide a report on the plaintiff’s loss.

The letter stated that the plaintiff would file its application on 24 November 2021.

  1. [35]
    On 22 November 2021, Holding Redlich replied to Gifford Legal.  That letter attached unredacted copies of customer invoices previously disclosed by the defendants with redactions.  The defendants repeated their earlier advice that if the plaintiff did not sign the request for trial date by 25 November 2021, they would apply to dispense with that requirement and commence preparing for trial.
  2. [36]
    Gifford Legal responded to Holding Redlich on 25 November 2021.  The letter referred to the defendants’ recent disclosure of unredacted invoices, comprising 781 pages, and to the plaintiff’s previously stated intention to take the steps identified in the letter sent on 12 November 2021, including engaging an expert accountant (a process which the letter said was anticipated would take approximately four weeks).  The letter stated that, in those circumstances, the matter was not ready for trial.
  3. [37]
    On 1 December 2021, Holding Redlich replied to Gifford Legal.  The letter advised that if the plaintiff did not provide its expert report by 23 December 2021, the defendants would apply to dispense with the plaintiff’s signature on the request for trial date.
  4. [38]
    On 13 December 2021, Gifford Legal sent a letter to Holding Redlich under r 444 setting out the plaintiff’s complaints about the defendants’ pleadings and disclosure. 
  5. [39]
    Holding Redlich replied to that letter on 20 December 2021, but that reply was not expressed to have been made pursuant to r 445.  The letter criticised the plaintiff’s approach to the proceeding and stated that it continued to be in breach of its obligation to resolve the dispute expeditiously.  Attached to the letter of 20 December 2021 was a further amended defence and supplementary list of documents.[5] 
  6. [40]
    On 23 December 2021, Gifford Legal wrote to Holding Redlich informing them that the forensic accountant engaged by the plaintiff had confirmed that the report on the plaintiff’s loss would be completed by the end of January 2022.
  7. [41]
    On 20 January 2022, Holding Redlich wrote to Gifford Legal.  The letter attached an updated request for trial date and stated that if the plaintiff did not sign and return that request by 1 February 2022, the defendants would bring an application to dispense with its signature.
  8. [42]
    On 31 January 2022, Gifford Legal wrote to Holding Redlich.  The letter stated that although they had anticipated providing further particulars of the plaintiff’s loss by that date, the expert had only recently identified that further information from the plaintiff was required.  The letter stated that it was anticipated that the further particulars of the plaintiff’s loss would be provided within a further period of three to four weeks.  On the same day, the plaintiff filed and served the application referred to in Gifford Legal’s letter of 12 November 2021 (see [34] above).
  9. [43]
    On 2 February 2022, Holding Redlich wrote to Gifford Legal stating that there were serious deficiencies in the plaintiff’s application.  The letter was also expressed to be a response under r 445 to Gifford Legal’s earlier letter of 13 December 2021.  It stated that the way the proceeding was being conducted was unsatisfactory and that the appropriate course would be for it to be the subject of case management on the Commercial List of the District Court.  It sought the plaintiff’s consent to that course within 48 hours.
  10. [44]
    On 4 February 2022, the defendants filed an application to place the proceeding on the Commercial List.
  11. [45]
    On 8 February 2022, Holding Redlich wrote to Gifford Legal addressing in detail what it said were the deficiencies in the plaintiff’s application.  That letter also canvassed the need for directions to be made for the future progress of the proceeding.
  12. [46]
    On 11 February 2022, Gifford Legal wrote to Holding Redlich confirming that the plaintiff consented to the matter being placed on the Commercial List.  The letter also stated that the plaintiff would provide a more fulsome response to the matters raised in Holding Redlich’ letters of 2 and 8 February 2022 as soon as Gifford Legal was able to, including proposed directions for the future conduct of the proceeding. 
  13. [47]
    On 15 February 2022, Gifford Legal wrote again to Holding Redlich attaching proposed directions.  Holding Redlich responded to Gifford Legal about the proposed directions on 16 February 2022.
  14. [48]
    On 21 February 2022, Muir DCJ (as her Honour then was) ordered that the proceeding be placed on the District Court’s Commercial List.  Among other things, the plaintiff was directed to file and serve any expert accountant’s report by 14 March 2022.
  15. [49]
    On 7 March 2022, the plaintiff filed a further amended statement of claim.  By those amendments, the plaintiff abandoned various claims it had previously pleaded: restitution of bonuses paid to Mr Forrester and Ms Kelly; solicitation of the plaintiff’s employees by the defendants; conversion of the plaintiff’s property by Mr Forrester and Ms Kelly; and injunctive relief against Mr Forrester and Ms Kelly to enforce the employment restraint.  The further amended statement of claim also amended the pleading of the plaintiff’s loss and damage to claim damages which exceeded the jurisdiction of the District Court.
  16. [50]
    On 14 March 2022, the plaintiff served a copy of an expert report prepared by Ms Milne of Vincents.  That report was dated 4 March 2022.  I infer that it was this report which informed the amendment of the plaintiff’s claim for loss and damage in the further amended statement of claim. 
  17. [51]
    On 7 April 2022, Holding Redlich wrote to Gifford Legal, attaching a further supplementary list of documents.  That supplementary disclosure included a further bundle of unredacted invoices which had previously been disclosed in redacted form.  The letter also set out further complaints about the plaintiff’s disclosure and identified further documents which the defendants claimed the plaintiff was required to disclose, including all documents considered by Ms Milne in preparing her report.
  18. [52]
    On 20 April 2022, Holding Redlich sent a 26-page letter to Gifford Legal pursuant to r 444.  The letter set out extensive complaints about the plaintiff’s pleadings and disclosure.  Further, the letter identified the defendants’ fundamental complaint that the amendments to the pleading of the plaintiff’s loss took the proceeding beyond the jurisdiction of the District Court. 
  19. [53]
    On 27 April 2022, Gifford Legal replied to Holding Redlich pursuant to r 445.  Although the plaintiff rejected most of the defendants’ complaints, the letter attached a further supplementary list of documents.  The plaintiff also stated its intention to amend to address a failure to plead the basis upon which its damages had been calculated, with the amendments to reflect the methodology set out in Ms Milne’s report.  As to the issue of the jurisdiction of the District Court, the plaintiff raised the prospect of the parties consenting to the proceeding being heard by the District Court, in excess of its jurisdiction, under s 72 of the District Court of Queensland Act 1967.
  20. [54]
    Holding Redlich wrote to Gifford Legal on 27 April 2022, advising that the defendants would not consent to the matter continuing in the District Court.  The plaintiff then filed an application the same day for the transfer of the proceeding to this court.
  21. [55]
    On 28 April 2022, Muir DCJ ordered that the proceeding be transferred to this court.
  22. [56]
    On 1 June 2022, the plaintiff filed a notice of change of solicitor.  Since that time, the plaintiff has been represented by its current solicitors (Wotton Kearney).
  23. [57]
    On 18 July 2022, Holding Redlich wrote to Wotton Kearney.  The letter stated that the previous exchanges of correspondence raising concerns on both sides about pleadings and disclosure had not been productive.  It proposed directions leading to a mediation of the dispute and, if that mediation was unsuccessful, the parties signing a request for trial date. 
  24. [58]
    On 19 July 2022, both parties provided further supplementary disclosure.
  25. [59]
    Wotton Kearney wrote to Holding Redlich on 22 July 2022, indicating general agreement to the steps proposed in the letter of 18 July 2022 but noting their recent engagement meant that the timeframes might need to be pushed out.  The letter stated that the plaintiff would provide revised timetabling directions.
  26. [60]
    On 16 August 2022, Wotton Kearney provided Holding Redlich with the plaintiff’s proposed changes to the timetabling directions as well as suitable dates for a mediation to take place in September 2022.
  27. [61]
    Holding Redlich wrote to Wotton Kearney on 19 August 2022, proposing further changes to the timetabling directions.
  28. [62]
    On 26 August 2022, the defendants filed an application seeking orders referring the matter to mediation and for case management by a judge of this court. 
  29. [63]
    On 29 August 2022, Wotton Kearney wrote to Holding Redlich complaining that the defendants had not sent a letter under r 444 before filing their application.  The plaintiff also substantially agreed to the revised timetabling directions proposed by the defendants.
  30. [64]
    The parties subsequently sent a request for consent orders by which the defendants’ application was withdrawn.  Those orders were made on 1 September 2022.
  31. [65]
    The parties took part in a mediation on 19 October 2022.  The proceeding did not settle.
  32. [66]
    On 18 November 2022, Holding Redlich wrote to Wotton Kearney under r 444 complaining about the plaintiff’s disclosure.  Wotton Kearney replied to Holding Redlich on 23 November 2022, stating that the plaintiff would provide a supplementary list of documents by 31 December 2022 disclosing any documents in its possession or control which came within the categories requested by the defendants.
  33. [67]
    On 15 December 2022, the defendants filed an application seeking orders for further disclosure and to strike out parts of the plaintiff’s further amended statement of claim or, alternatively, for the provision of further and better particulars.  The parties resolved that application by agreement and orders were made by consent on 22 December 2022.  Those orders required that the plaintiff disclose documents identified in Holding Redlich’s letter of 18 November 2022 by 20 January 2023.  The application for orders striking out parts of the further amended statement of claim, or for further particulars, was adjourned to a date to be fixed.  The proceeding was placed on the Supervised Case List and the plaintiff agreed to pay the defendants’ costs of the application.
  34. [68]
    On 16 January 2023, the plaintiff filed a second further amended statement of claim and provided further particulars.
  35. [69]
    On 17 January 2023, Wotton Kearney wrote to Holding Redlich seeking further disclosure by the defendants.  Holding Redlich subsequently confirmed to Wotton Kearney that all requested documents within the defendants’ possession or control had already been disclosed.
  36. [70]
    On 20 January 2023, the plaintiff provided a supplementary list of documents as contemplated by the orders made on 22 December 2022.
  37. [71]
    On 1 February 2023, Holding Redlich wrote to Wotton Kearney raising complaints about the plaintiff’s disclosure and requesting a list of the documents provided to the plaintiff’s expert, failing which the defendants would correspond directly with Vincents about that matter.  Wotton Kearney replied to Holding Redlich on 8 February 2023, stating that the plaintiff had already provided the requested list by way of the plaintiff’s supplementary disclosure on 20 January 2023.
  38. [72]
    On about 14 April 2023, the defendants engaged their own expert to prepare a report on the plaintiff’s loss, Mr Ashby of McGrathNicol.  On 15 May 2023, Mr Ashby wrote to Holding Redlich setting out information that he required to prepare his report.
  39. [73]
    Between May and July 2023, Holding Redlich corresponded with Ms Milne and asked that she provide copies of the documents she considered for the purpose of preparing her report.  By that time, Ms Milne had left Vincents and was working at a different accounting firm.  Eventually, Holding Redlich served Ms Milne with a notice of non-party disclosure.  Ms Milne provided the requested documents on 10 July 2023. 
  40. [74]
    In September 2023, Holding Redlich contacted the court registry and it became apparent that the order placing the proceeding on the Supervised Case List had not been brought to the attention of the Supervised Case List Manager.  The defendants filed a request to have the proceeding placed on the Commercial List but were advised that it would be managed on the Supervised Case List.
  41. [75]
    On 3 October 2023, Holding Redlich wrote to Wotton Kearney about proposed directions for the future progress of the proceeding.  Directions were eventually agreed which required the parties to prepare a joint report on the status of the proceeding and to provide that report to the Supervised Case List Manager and the Associate to Brown J (as her Honour then was) by 13 November 2023.  That date was subsequently extended by consent to 22 November 2023.
  42. [76]
    From mid-November 2023, the solicitors exchanged correspondence about the form of draft consent orders to give effect to the plaintiff’s abandonment of aspects of its claim (see [49] above), and for the plaintiff to pay the costs thrown away by the withdrawal of those parts of the claim.  Those orders were eventually agreed and were made by consent on 15 December 2023.
  43. [77]
    On 12 December 2023 and 21 December 2023, Holding Redlich wrote to Wotton Kearney requesting that the plaintiff disclose documents which Mr Ashby required in order to prepare his report on the plaintiff’s loss.  These were documents which Mr Ashby had requested from Holding Redlich on 15 May 2023 (see [72] above).
  44. [78]
    On 14 December 2023, Brown J made directions for (among other things): the delivery of lay witness summaries by the plaintiff on 18 February 2024, and by the defendants on 15 March 2024; that both parties respond to outstanding requests for further disclosure by 15 December 2023 and provide any further disclosure by 10 January 2024; that the defendants serve their expert’s report on the plaintiff’s loss by 15 February 2024; and for a subsequent conferral between the parties’ experts.
  45. [79]
    The plaintiff did not disclose any of the documents which Holding Redlich had requested for the purpose of briefing the defendants’ expert by 10 January 2024, and the parties engaged in correspondence about that controversy. 
  46. [80]
    On 5 February 2024, Wotton Kearney informed Holding Redlich that the plaintiff would not be disclosing any further documents.  Holding Redlich then instructed Mr Ashby to complete his report.  The defendants served Mr Ashby’s report on 22 February 2024.
  47. [81]
    The plaintiff filed summaries of the evidence of its lay witnesses on 20 February 2024.
  48. [82]
    The defendants filed summaries of the evidence of their lay witnesses on 15 March 2024.
  49. [83]
    In March and April 2024, Mr Ashby sought to arrange a time to confer with Ms Milne for the purpose of preparing a joint expert report. 
  50. [84]
    On 8 April 2024, Ms Milne contacted Mr Ashby and informed him that she had been instructed by Wotton Kearney to pause work on the matter in circumstances where the plaintiff had made an offer to settle which remained open for acceptance.  By that offer, the plaintiff offered to discontinue the proceeding and to pay the defendants’ costs on the standard basis.
  51. [85]
    On 10 April 2024, the solicitors exchanged emails in which Holding Redlich expressed concern about the fact that the experts had not conferred by the date required by the orders made on 14 December 2023, and that the joint expert report was due to be provided the next day.  Wotton Kearney responded by suggesting that the court timeframes should be extended because the plaintiff was not interested in incurring unnecessary costs in the event the matter settled or the plaintiff discontinued the proceeding.
  52. [86]
    On 12 April 2024, the defendants made a counteroffer to settle which remained open until 16 April 2024.  The plaintiff did not accept that counteroffer.
  53. [87]
    The plaintiff made a further settlement offer on 19 April 2024.  The defendants rejected that further offer.
  54. [88]
    On 23 April 2024, the plaintiff filed its application for leave to discontinue the proceeding.  That application was resolved by the parties’ agreement to the court making the orders set out at [7].

The parties’ submissions on the question of indemnity costs

  1. [89]
    The defendants relied on the principle that civil litigation is plaintiff driven.[6]  They submitted that the plaintiff’s conduct in this case meant that the proceeding had become defendant driven.
  2. [90]
    The defendants submitted that the plaintiff had consistently engaged in passive resistance to the progression of its own claim.  They pointed to what they described as the plaintiff allowing the proceeding to lie fallow for extended periods: first, with little done to progress the action throughout 2021; secondly, three months’ inaction following the transfer of the proceeding to this court in May 2022; thirdly, a further nine months of inaction after the proceeding was placed on the Supervised Case List in December 2022.  The defendants relied on the three applications they brought seeking to make the proceeding the subject of court supervision (see [44]-[48], [62]-[64] and [67] above) as demonstrating that the plaintiff’s inactivity forced them to take the initiative to progress the proceeding.
  3. [91]
    The defendants further submitted that the plaintiff’s conduct demonstrated a pattern of brinksmanship and capitulation by agreeing to remedy issues raised by the defendants, only to then engage in further delay.  As examples of this, they pointed to: first, delays in the plaintiff filing the first amended statement of claim (see [17]-[20] above); secondly, delays in the plaintiff providing its expert report (see [36], [40], [42] and [50] above); thirdly, the plaintiff’s belated agreement to directions for the progress of the proceeding after the defendants filed an application on 26 August 2022 (see [62]-[64] above); fourthly, the plaintiff’s agreement to orders after the application to place the matter on the Supervised Case List was filed on 15 December 2022 (see [67] above).
  4. [92]
    To demonstrate the existence of undue delay and prolongation of the present proceeding, the defendants sought to compare the length of this proceeding with the much shorter time that was taken for the resolution of a proceeding which the plaintiff brought against another former employee in New South Wales relying upon the same restraint provisions.  That proceeding was commenced of 17 May 2022 and determined on 14 March 2023.  The former employee sued in the New South Wales proceeding had commenced working for the third defendant and the company provided an indemnity for her legal costs.
  5. [93]
    Finally, the defendants relied on what they described as the plaintiff’s non-cooperation and lengthy delays in disclosing documents it provided to its expert accountant, Ms Milne.
  6. [94]
    The plaintiff submitted that, when considered in the context of the parties’ correspondence at relevant times, the three applications brought by the defendants seeking to engage the supervision of the court did not demonstrate that it was not attempting to progress the proceeding.  The plaintiff argued that to properly plead and particularise its loss, and for its expert to calculate the quantum of that loss, it required disclosure from the defendants of documents relevant to the issue of solicitation of the plaintiff’s clients and the value of the work done for those clients.  It submitted that the process of obtaining that disclosure from the defendants and resolving the issue of redaction of documents which the defendants disclosed was protracted.  The plaintiff also submitted that the defendants were themselves guilty of delay in relation to the preparation of their own expert report.  In that respect, the plaintiff emphasised the point that the obligation imposed by r 5 is an obligation on all parties, not just the plaintiff.[7]
  7. [95]
    Counsel for the plaintiff frankly accepted that aspects of the procedural steps undertaken in this proceeding could have been progressed more efficiently.  However, the plaintiff rejected the suggestion that its conduct of the proceeding, as a whole, was so plainly unreasonable as to warrant the making of an order for indemnity costs.

Consideration

  1. [96]
    Although the proceeding did not progress as expeditiously as it should have, I am not satisfied that the plaintiff was solely responsible for the prolongation of the proceeding or that the plaintiff’s conduct of the litigation caused the defendants to incur costs which they should not have to bear.  There are two major reasons for this conclusion.
  2. [97]
    First, the defendants’ complaints about the time which the plaintiff took to obtain an expert report and provide proper particulars of its loss takes no account of their own delay in disclosing documents which the plaintiff required to take those steps.  I accept the plaintiff’s submission that a significant cause of the delay in the proceeding was the dispute about the defendants’ disclosure, including the redaction of invoices issued by the third defendant for services provided to the plaintiff’s customers.  While this dispute remained unresolved, the plaintiff was unable to properly brief an expert to assist in the calculation of its loss or provide proper particulars of that loss.
  3. [98]
    The chronology set out at [23] to [36] above shows that for approximately six months, from 16 October 2020 to 19 April 2021, the defendants repeatedly complained about the plaintiff’s particularisation of its loss, threatening on two occasions to bring an application to compel the plaintiff to provide proper particulars but not ultimately filing such an application.  During that same period, the defendants failed to respond to the plaintiff’s complaint about the defendants’ own disclosure and their redaction of documents relevant to determining the amount of work performed for the plaintiff’s customers.  They did not address the plaintiff’s argument that it was this inadequate disclosure which was preventing the proper particularisation of its loss.  When the defendants eventually responded to those issues, on 19 April 2021, they maintained their refusal to provide unredacted copies of the invoices.
  4. [99]
    It can be accepted that, after the plaintiff received that response, it did not act with sufficient urgency to progress its complaint about the disclosure of documents relevant to the assessment of its loss.  A period of almost seven months passed before the plaintiff eventually foreshadowed an intention on 12 November 2021 to bring its own application to seek to have the issue resolved.  Less than two weeks after that, the defendants disclosed unredacted copies of documents which the plaintiff had requested more than 12 months earlier.  The defendants have provided no explanation for their refusal to provide those unredacted documents in response the plaintiff’s previous requests.  In those circumstances, although it is true that there was little progress in the proceeding throughout 2021, the defendants’ failure to respond to the plaintiff’s complaint about the disclosure of documents relevant to the question of loss seems to have contributed significantly to that situation.
  5. [100]
    Secondly, the defendants’ submissions ignore their own delay in obtaining an expert report which addressed the plaintiff’s loss.  The defendants first demanded that the plaintiff sign a request for trial date on 22 November 2021, the same date that they finally complied with the plaintiff’s request for disclosure of unredacted invoices which it required to properly particularise its loss.  The plaintiff made clear that, having received those unredacted documents, it was obtaining an expert report addressing its loss.  The defendants then repeated their demand that the plaintiff sign a request for trial date on 20 January 2022, less than two months after the disclosure of the unredacted documents.  The defendants have not explained on what basis they considered the matter was ready for trial at that stage when they had been put on notice that the plaintiff had engaged an expert to prepare a report and the defendants would themselves, in all likelihood, need to obtain a responsive report (as in fact eventually transpired).
  6. [101]
    Although the plaintiff served its expert report on 14 March 2022, the defendants did not engage their own expert until 14 April 2023, more than a year later.  The only attempt to explain that delay is the assertion that Ms Milne’s report referred to documents which the plaintiff had not provided to the defendants through disclosure.  That explanation ignores the fact that, after the defendants requested that the plaintiff disclose all documents provided to Ms Milne in April 2022, they did nothing further to press that request until sending a letter pursuant to r 444 on 18 November 2022 and filing an application on 15 December 2022.  The plaintiff provided its further disclosure on 20 January 2023.
  7. [102]
    After the defendants engaged Mr Ashby, there was further delay.  Although Mr Ashby identified documents which he required to prepare his report on 15 May 2023, the defendants did not request those documents from the plaintiff until December 2023. 
  8. [103]
    Mr Ashby’s report was not served until 22 February 2024, almost two years after the plaintiff had served Ms Milne’s report. 
  9. [104]
    The defendants’ complaint about obtaining copies of the documents considered by Ms Milne is not convincing.  Ms Lafferty, a solicitor employed by Wotton Kearney, deposed that the material produced by Ms Milne pursuant to the defendants’ notice of non-party disclosure essentially replicated the plaintiff’s supplementary disclosure on 20 January 2023.  The defendants did not challenge that evidence.  The defendants have not explained why they were unable to serve Mr Ashby’s report for a period of more than 12 months after the plaintiff provided its supplementary disclosure.
  10. [105]
    I cannot see how the defendants can now claim to have been ready for a trial before Mr Ashby’s report was served.  In those circumstances, the defendants’ complaint about having to repeatedly apply for directions and to make the proceeding subject to court supervision – in February 2022, August 2022 and December 2022 – loses a great deal of force.  It is difficult to see how the responsibility for the delay in the proceeding can be laid wholly at the feet of the plaintiff when, throughout that period, the defendants were not themselves ready for a trial as they had yet to deliver their expert report.  This included the second period which the defendants characterised as the plaintiff having allowed the proceeding to lie fallow, being the period of three months after May 2022.  That remained the position in the third period which the defendants characterised as the plaintiff having allowed the proceeding to lie fallow, being the period of nine months after December 2022.  The defendants were not themselves ready for a trial until they had served Mr Ashby’s report in February 2024.  In those circumstances, I cannot accept that the plaintiff was solely to blame for the prolongation of the proceeding.
  11. [106]
    While the parallel proceeding which the plaintiff brought in New South Wales was dealt with in a much shorter period, there is nothing in the material which demonstrates why that was so.  Importantly, it is not clear whether the same issues arose in that New South Wales proceeding regarding the disclosure of documents relevant to the assessment of the plaintiff’s loss or the preparation of expert reports.  The fact that the New South Wales proceeding progressed more expeditiously does not establish that the delay in this proceeding was solely the result of the plaintiff’s conduct.
  12. [107]
    None of this is to deny that the plaintiff might have acted with greater expedition in seeking to progress the proceeding.  However, given the conclusions I have reached about the defendants’ own delays, both in disclosing documents which the plaintiff required to particularise its loss and in obtaining its own expert report, I am not persuaded that the plaintiff’s conduct of the proceeding warrants an order for indemnity costs.  Having regard to the whole course of the proceeding, I do not regard an award of indemnity costs to be an appropriate sanction for the failure by the plaintiff to proceed in an expeditious way.

The defendants’ rejection of the offer to settle

  1. [108]
    On 8 April 2024, Wotton Kearney wrote to Holding Redlich setting out an open offer of settlement by the plaintiff.  The proposed terms of settlement were:
    1. upon the plaintiff undertaking not to bring any fresh claim against the defendants arising out of the subject matter of the proceeding, it be granted leave to discontinue the proceeding under r 304(2); and
    2. the plaintiff pay the defendants’ costs of and incidental to the proceeding on the standard basis.
  2. [109]
    That offer remained open for acceptance for seven days.
  3. [110]
    On 12 April 2024, Holding Redlich wrote to Wotton Kearney setting out the terms on which the defendants would be prepared to consent to the proceeding being dismissed.  Those terms included a more detailed form of undertaking, an order that the plaintiff pay the defendants’ costs fixed in the amount of $395,000 or, if the plaintiff failed to pay those fixed costs, that it pay the defendants’ costs assessed on the indemnity basis.  It was clear from the terms of the counter-offer that the defendants had rejected the plaintiff’s offer made on 8 April 2024.
  4. [111]
    The plaintiff now submits that its offer was reasonable and that the defendants had sufficient time to consider that offer in the period it remained open for acceptance.  If the defendants had accepted that offer, they would not have incurred further costs after 16 April 2024.  In those circumstances, no costs order should be made in favour the defendants after that date.
  5. [112]
    As already noted, the usual position where a plaintiff discontinues a proceeding is that the plaintiff is liable to pay the defendant’s costs up to the date of the discontinuance: r 307(1).  In this case, the discontinuance occurred on 3 May 2024.  The question whether the defendants’ failure to accept the plaintiff’s offer should relieve the plaintiff of that liability for the period from 17 April 2024 to 3 May 2024 must depend on whether the defendants acted unreasonably in rejecting the plaintiff’s offer.  I am not satisfied that they did.
  6. [113]
    As was submitted for the defendants, when the plaintiff made its offer, the defendants’ priority was seeking to remedy non-compliance with the orders for the experts to confer and prepare a joint report (see [83]-[85] above).  More importantly, I am not satisfied that, in the circumstances which existed while the plaintiff’s offer remained open, it was unreasonable for the defendants to have rejected a settlement on the basis that they would receive only standard costs.  I have explained above why I have not accepted the defendants’ submission that their costs should be assessed on the indemnity basis.  Notwithstanding that conclusion, I consider that the apparent merits of that submission were sufficient to make it reasonable for the defendants to reject the plaintiff’s offer and press their claim for indemnity costs.  On that basis, I do not consider that the defendants acted unreasonably in not accepting the offer made on 8 April 2024.  They should have their costs on the standard basis up to and including 3 May 2024, that being the date of the discontinuance.

Date for payment of the defendants’ costs

  1. [114]
    The defendants seek an order that the plaintiff pay their costs within 28 days of the amount of those costs being agreed or assessed. 
  2. [115]
    The basis upon which that order is sought is the lengths to which the former employee in the New South Wales proceeding, referred to at [92], was required to go to enforce a costs order made against the plaintiff in that proceeding.  Those steps included the issuing a garnishee notice and service of a statutory demand on the plaintiff.  In correspondence about an application by the plaintiff to stay the costs order made in the New South Wales proceeding, the plaintiff’s solicitor expressly relied on the fact that no date had been specified in the costs order as to when those costs were required to be paid.
  3. [116]
    The plaintiff submitted that there was no warrant for such an order because the UCPR provides mechanisms for the defendants to enforce payment of the assessed costs.
  4. [117]
    That may be accepted, but given the position adopted by the plaintiff in the New South Wales proceeding, it seems that the order the defendants seek may serve to reduce the prospect of further dispute between the parties.  In those circumstances, I am satisfied that it is appropriate to make the order.

Costs of the hearing on 6 June 2024

  1. [118]
    Both parties have had some success on the issues I was required to determine.  However, the most significant issue in dispute was whether the defendants’ costs should be assessed on the indemnity basis.  The plaintiff succeeded on that issue.  It should have an order for its costs of and incidental to the hearing on 6 June 2024, those costs being reduced by a small amount to reflect the defendants’ success on the other issues argued before me.

Conclusion

  1. [119]
    The orders will be as follows.
  1. The plaintiff is to pay the defendants’ costs of the discontinued proceeding from and including 17 April 2024 up to and including 3 May 2024.
  2. The defendants’ costs of the discontinued proceeding up to and including 3 May 2024, including the costs referred to in paragraph 3 of the orders of Muir J dated 3 May 2024, are to be assessed on the standard basis if not agreed.
  3. The plaintiff is to pay the defendants’ costs the subject of paragraphs 1 and 2 of these orders and paragraph 3 of the orders of Muir J dated 3 May 2024 within 28 days of the amount of those costs being agreed or assessed.
  4. The defendants are to pay 90% of the plaintiff’s costs of and incidental to the hearing on 6 June 2024 to be assessed on the standard basis if not agreed.

Footnotes

[1] Tector v FAI General Insurance Co Ltd [2001] 2 Qd R 463, 464 [5].

[2] Fairfield Services Pty Ltd (in liq) v Leggett [2020] QSC 183 (2020) 5 QR 50, [21], [22](b), [74]; Zelcliff Pty Ltd v Container Exchange (Qld) Ltd [2022] QSC 239 [2022] 45 QLR, [27], [33].

[3]  Transcript 1-6:27 to 1-7:27.

[4]  [2010] QSC 182, [24]-[27].

[5]  The further amended defence was filed with the court on 10 January 2022. 

[6] Robinson v Laws [2001] QCA 122, [52].

[7] Sorrentino Designs Pty Ltd v McKenna [2024] QSC 48, [9].

Close

Editorial Notes

  • Published Case Name:

    Timberwolf Planting Pty Ltd v Forrester

  • Shortened Case Name:

    Timberwolf Planting Pty Ltd v Forrester

  • MNC:

    [2024] QSC 254

  • Court:

    QSC

  • Judge(s):

    Cooper J

  • Date:

    25 Oct 2024

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Fairfield Services Pty Ltd (in liquidation) v Leggett(2020) 5 QR 50; [2020] QSC 183
4 citations
Jump To
Cite 1 - [2020] QSC 183
Cite 2 - [2020] QSC 183
Cite 3 - (2020) 5 QR 50
Cite 4 - (2020) 5 QR 50
Fick v Groves (No 2) [2010] QSC 182
2 citations
Jump To
Cite 1 - [2010] QSC 182
Cite 2 - [2010] QSC 182
Robinson v Laws[2003] 1 Qd R 81; [2001] QCA 122
2 citations
Jump To
Cite 1 - [2001] QCA 122
Cite 2 - [2001] QCA 122
Sorrentino Designs Pty Ltd v McKenna [2024] QSC 48
2 citations
Jump To
Cite 1 - [2024] QSC 48
Cite 2 - [2024] QSC 48
Tector v FAI General Insurance Co Ltd[2001] 2 Qd R 463; [2000] QCA 426
2 citations
Jump To
Cite 1 - [2001] 2 Qd R 463
Cite 2 - [2001] 2 Qd R 463
Zelcliff Pty Ltd v Container Exchange (Qld) Ltd [2022] QSC 239
2 citations
Jump To
Cite 1 - [2022] QSC 239
Cite 2 - [2022] QSC 239

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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