Sentinel Industrial Pty Ltd v Yamba Shipping Pty Ltd (No 2)
[2024] QSC 289
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- Unreported Judgment
- Sentinel Industrial Pty Ltd v Yamba Shipping Pty Ltd (No 2)[2024] QSC 289
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Sentinel Industrial Pty Ltd v Yamba Shipping Pty Ltd (No 2)[2024] QSC 289
Sentinel Industrial Pty Ltd v Yamba Shipping Pty Ltd (No 2)[2024] QSC 289
SUPREME COURT OF QUEENSLAND
CITATION: | Sentinel Industrial Pty Ltd v Yamba Shipping Pty Ltd (No 2) [2024] QSC 289 |
PARTIES: | SENTINEL INDUSTRIAL PTY LTD ACN 606 262 408 AS TRUSTEE FOR THE SENTINEL INDUSTRIAL RETAIL TRUST (plaintiff) v YAMBA SHIPPING PTY LTD ACN 169 477 356 (first defendant) WARREN ALFRED MCKAY (second defendant) |
FILE NO/S: | BS 7720 of 2021 |
DIVISION: | Trial Division |
PROCEEDING: | Trial |
DELIVERED ON: | 22 November 2024 |
DELIVERED AT: | Brisbane |
HEARING DATE: | On the papers |
JUDGE: | Bowskill CJ |
ORDERS: |
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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 was successful at trial – where, prior to the trial, the plaintiff made three offers to settle the proceedings – where the defendants did not accept any of the offers – where the judgment in favour of the plaintiff was more favourable for the plaintiff than the offers – whether the plaintiff’s costs should be assessed on a standard or indemnity basis Uniform Civil Procedure Rules 1999 (Qld), r 360 Calderbank v Calderbank [1976] Fam Law 93; [1975] 3 All ER 333 Springfield City Group Pty Ltd v Pipe Networks Pty Ltd (No 2) [2022] QSC 299 |
COUNSEL: | C A Johnstone, with S Russell, for the plaintiff The second defendant appeared on his own behalf and, with leave, on behalf of the first defendant at the trial No submissions in relation to costs were provided by the defendants |
SOLICITORS: | Russells for the plaintiff |
- [1]On 1 November 2024, I delivered judgment for the plaintiff in this proceeding, both in respect of its claim and the dismissal of the counterclaim: Sentinel Industrial Pty Ltd v Yamba Shipping Pty Ltd [2024] QSC 261. Directions were made for the filing of material and submissions in relation to costs, with that question to be determined on the papers, and for the plaintiff to provide a form of judgment reflecting the appropriate interest calculation. The plaintiff has filed an affidavit setting out the offers it made to settle the proceeding and submissions in relation to the costs order it seeks. No submissions or other material have been filed by or on behalf of the defendants.
- [2]Having regard to the outcome of the proceeding, there is no reason why the general rule, that costs follow the event, should not apply (see r 681 of the Uniform Civil Procedure Rules 1999). As to the basis on which those costs should be assessed, the plaintiff contends that, due to the defendants’ unreasonable failure to accept each of three separate offers the plaintiff made to settle the proceeding, the defendants should be ordered to pay the plaintiff’s costs on the standard basis up to the offer first in time, and on the indemnity basis after that (or, alternatively, by reference to the timing of the second or third offers).
- [3]The first offer was a Calderbank[1] offer, made on 25 July 2022, to settle both the claim and counterclaim on the basis of payment to the plaintiff of $500,000, with the parties to bear their own costs. The offer was open for 15 days and it was expressly stated that the offer would be relied upon in support of an application for indemnity costs. I infer from this letter of offer, and the next one, that it was made at a time when (a) the defendants were still legally represented and (b) the plaintiff had served its evidence, but the defendants had not. The offer was not accepted. The plaintiff submits this represented a significant compromise on its part, and that it was unreasonable for the defendants not to have accepted the offer.
- [4]The second offer was made on 21 September 2022, in the same terms. The timing of this offer was after a separate proceeding by the first defendant in the Federal Court, in relation to one of its vessels, had been dismissed. The letter of offer includes a statement by the plaintiff’s solicitor that this was “disastrous” for the defendants’ counterclaim. The plaintiff submits that fact reinforces the conclusion that the defendants’ failure to accept its offer, remade at this time, was unreasonable.
- [5]The third offer was a formal offer made under chapter 9, part 5 of the UCPR on 24 October 2023. By this time, the defendants no longer had legal representation. The offer was to settle the claim and counterclaim on the basis of a payment of $500,000 to the plaintiff (with no payment of interest) and payment of the plaintiff’s costs on the standard basis.
- [6]The plaintiff submits that, even if the court does not accept that failure to accept the two earlier offers was unreasonable, such as to justify the exercise of the discretion to order payment of costs on the indemnity basis from either of those times,[2] there is no reason to depart from the order contemplated by r 360(2) of the UCPR, in circumstances where the defendants did not accept the formal offer made in October 2023. The effect of that rule is that where, as here, a plaintiff makes an offer under the UCPR, that is not accepted by the defendants, and the plaintiff obtains an order (judgment) “no less favourable than” the offer, then unless the defendants show another order is appropriate, the court must order the defendants to pay the plaintiff’s costs on the standard basis up to the day of service of the offer and on the indemnity basis after that.
- [7]In the absence of any submissions from the defendants, but conscious of the fact that they are not legally represented, I have had regard to the court file to assist in deciding how the discretion as to costs should be exercised in this case. This proceeding started its life in the District Court in 2020, as a claim by the plaintiff for just over $294,000. The defendants filed a counterclaim for a much greater sum, which led to the proceeding being transferred to the Supreme Court in July 2021. There was also, at one stage, a third party proceeding (between the defendants and their former accountants). The plaintiff’s claim remained in that form, as to the money amount, until the third further amended statement of claim was filed on 28 July 2023, by which time the claim had increased to just over $1,840,000. It was also in this amended pleading that the details of the steps taken by the plaintiff to try to relet the premises were pleaded in detail (paragraph 29). The defendants ultimately, at trial, did not contest the reasonableness of those mitigatory steps; but they would have been a particularly relevant factor in the assessment of the plaintiff’s claim at an earlier stage.
- [8]The plaintiff, in its written submissions on costs, contends that the plaintiff’s claim was “at least $1,080,211.36” at the time of the first offer made in July 2022. That is said by reference to paragraph [27] of the second further amended statement of claim (filed 12 November 2021), which pleads in a general way that the amounts payable for rent and outgoings under both the land and seabed subleases “will continue to accrue… until the relevant land the subject of those subleases is relet”.[3] But as already noted, the pleading was not amended, to articulate the increased amount of the claim, nor the steps taken to relet the relevant land, until the third further amended statement of claim, filed on 28 July 2023. There is no other evidence before the court demonstrating quantification of the increasing amount of the plaintiff’s claim, or communication of that to the defendants, at an earlier time.
- [9]As Bond JA observed, in Springfield City Group Pty Ltd v Pipe Networks Pty Ltd (No 2) [2022] QSC 299 at [9]:
“… 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.”
- [10]In the circumstances of this case, and in the absence of any other evidence, I am not persuaded to conclude that the defendants’ failure to accept the earlier offers, made in 2022, was unreasonable, such as to warrant the exercise of the discretion to order that costs be paid on the indemnity basis from either of those earlier times. I am not satisfied that it could be said, from that time, that “notionally the real cause and occasion of the litigation is the unreasonable attitude adopted by the” defendants, as opposed to an ongoing dispute, which was evolving in a number of respects.
- [11]However, I am satisfied that the order contemplated by r 360(2) of the UCPR is appropriate. The plaintiff made an offer under the rules; it was not accepted by the defendants; the plaintiff has obtained a judgment which is far more favourable to it than the offer it made; and the court can be satisfied the plaintiff was at all material times willing and able to carry out what was proposed in the offer. The defendants have not attempted to show why any other order for costs is appropriate, and so I will proceed as required by r 360(2) to order that the defendants pay the plaintiff’s costs:
- calculated on the standard basis, up to and including the day of service of the offer (24 October 2023); and
- calculated on the indemnity basis, after the day of service of the offer (25 October 2023).
- [12]I accept the calculation of interest payable on the amount of the plaintiff’s claim, as set out in the affidavit of Mr Cardona affirmed on 8 November 2024.
- [13]Accordingly, I will order that:
- The defendants pay to the plaintiff the sum of $2,423,123.92 including $145,448.97 interest to 1 November 2024.
-
The defendants pay the plaintiff’s costs of the proceeding, including any reserved costs, as agreed or assessed:
- up to and including 24 October 2023, on the standard basis; and
- from and including 25 October 2023, on the indemnity basis.