Sorrentino Designs Pty Ltd v McKenna
[2024] QSC 48
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- Unreported Judgment
- Sorrentino Designs Pty Ltd v McKenna[2024] QSC 48
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Sorrentino Designs Pty Ltd v McKenna[2024] QSC 48
Sorrentino Designs Pty Ltd v McKenna[2024] QSC 48
SUPREME COURT OF QUEENSLAND
CITATION: | Sorrentino Designs Pty Ltd v McKenna [2024] QSC 48 |
PARTIES: | SORRENTINO DESIGNS PTY LTD (plaintiff) v ELENI McKENNA (defendant) |
FILE NO: | 8986 of 2022 |
DIVISION: | Trial Division |
PROCEEDING: | Trial |
DELIVERED ON: | 8 March 2024 |
DELIVERED AT: | Brisbane, ex tempore |
HEARING DATE: | 7 and 8 March 2024 |
JUDGE: | Bowskill CJ |
ORDER: |
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CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW THE EVENT – where, on the second day of trial, the plaintiff sought leave to discontinue the proceedings after significant issues were raised with the plaintiff’s claim on day one – where the plaintiff was not the appropriate party to bring the proceedings – where the matter could but for an alternative basis for relief claimed have been heard in the Magistrates Court – where the defendant bears some responsibility for not raising the issues with the plaintiff’s claim prior to the matter coming to trial in the Supreme Court – whether costs should be awarded on an indemnity or standard basis Uniform Civil Procedure Rules 1999 (Qld), r 5 |
COUNSEL: | A M Laylee for the plaintiff S Philippou for the defendant |
SOLICITORS: | Agnew Litigation & HR for the plaintiff McCarthy Durie Lawyers for the defendant |
- [1]In this matter, by proceedings commenced in July 2022, the plaintiff, Sorrentino Designs Pty Ltd, sought to recover from the defendant, Ms McKenna, a sum of money of about $99,000 by way of damages for breach of contract or breach of equitable duty of confidence and, alternatively, a sum by way of damages or compensation under section 1317H of the Corporations Act 2001 (Cth).
- [2]It was the second aspect of the prayer for relief, the reliance on section of 1317H of the Corporations Act, which found this proceeding being commenced in the Supreme Court rather than in the Magistrates Court which has jurisdiction to deal with civil disputes and would have had jurisdiction to deal with this dispute but for the reliance on that section. The addition of alternative causes of action of that kind, which it is difficult to see would add in substance in any way to any contractual or equitable claim, such as to see a proceeding that could otherwise proceed in a lower cost jurisdiction proceed in this Court, is not to be encouraged.
- [3]The proceeding has made its way all the way to a trial in this Court, with that trial commencing yesterday. It was apparent from my review of the pleadings before starting the trial, only having had the matter allocated to me for hearing the day before, that there were some significant difficulties with the matter, not least of which is that the entity which appears to have been the entity to suffer loss, if there was any suffered flowing from the allegations the subject of the proceeding, was not a party to the proceeding. That entity is Sorrentino Property Pty Ltd.
- [4]The plaintiff this morning seeks leave to discontinue the proceeding in circumstances where some of the issues in relation to it were addressed in court yesterday. In my view, that is an appropriate way to proceed because it is not possible to see how the plaintiff, Sorrentino Designs Pty Ltd, could succeed in its claims given that the entity which was the party to the contract for sale of the rent roll, which is Sorrentino Property Pty Ltd, is not a party to this proceeding. There is no pleading, in any event, of that entity’s interest in the contract. Contrary to that, in paragraph 8 of the amended statement of claim, it is pleaded that the plaintiff sold its rent roll, which is plainly not correct. Further, although on the evidence before the court there was some arrangement by Mr Sorrentino, who is the sole director of both companies, to somehow transfer the liability for the money Sorrentino Property contends it has lost, there are two difficulties with that: first, I have difficulty seeing how that could have been of legal effect; and second, it is not pleaded.
- [5]The question remains what to do with the costs of the proceeding. The plaintiff accepts that the discontinuance of the proceeding should be accompanied by an order that it pay the costs of the defendant, but contends that should be on the standard basis. I pause to note that the plaintiff does not take issue with any such order being on the Supreme Court scale. Notwithstanding the comments I have made about the undesirability of adding alternative arguments that do not really add anything to a claim and therefore put the matter in the jurisdiction of this Court rather than a lower cost jurisdiction being inappropriate, I accept that the plaintiff having done that, and invoked this Court’s jurisdiction by relying on section 1317H of the Corporations Act, the defendant would be entitled to costs on that basis.
- [6]The defendant, on the other hand, argues that it should have its costs on the standard basis only up to the date of an offer that it made to settle the proceeding and then indemnity costs from that point on.
- [7]In that regard, the defendant by her solicitor made an offer to settle the proceeding on 21 December 2022. That was an offer to pay the plaintiff $6,000 inclusive of costs and interest in full and final settlement of the claim. The offer was said to remain open until 30 January 2023. Since then, there have been no further offers made and no correspondence as between the solicitors is put before the court, for example, outlining the issues with the proceeding.
- [8]Counsel for the plaintiff submits that there were still many moving parts at the time that offer was made, including an amended defence being filed during the offer period and outstanding disclosure issues, such that it should not be concluded it was unreasonable not to accept the offer.
- [9]It is important that all parties to any proceeding in any court pay heed to rule 5 of the Uniform Civil Procedure Rules 1999 (Qld). That rule places an obligation on all parties to undertake to the court and to the other parties to proceed in an expeditious way, to avoid undue delay, expense and technicality, to facilitate the purpose of the rules – which is the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. I emphasise that is an obligation on both parties, not merely the plaintiff.
- [10]In my view, for the following reasons, the defendant should not receive an order for indemnity costs because it could have taken and should have taken more steps to point out the fundamental problem with this proceeding and it did not do so.
- [11]In that regard, I note that one of the central documents, which is the sale agreement relating to the sale of the rent roll, was provided to the defendant’s solicitors in August 2022. It is apparent on the face of that document that the plaintiff was not the contracting party. Yet in the notice of intention to defend originally filed on 1 September 2022, the allegation that the plaintiff sold its rent roll was admitted. That admission seems to have been continued in the amended defence filed on 9 January 2023. It was effectively withdrawn in the further amended defence which was filed on 9 June 2023. Even though the defendant’s lawyers should have been alert to this from the time they received a copy of that document, they certainly were by the time they filed the further amended defence in June 2023, because there is in that document a denial of the allegation that the plaintiff suffered loss because the plaintiff was not a party to the contract for sale.
- [12]Acting consistently with rule 5, I would have expected the defendant’s solicitors at some point to have set all this out and made a very clear offer in order to justify an award for indemnity costs going forward. To rely solely on one offer made on 21 December 2022, now, at the point where we have had one day of trial is not, in my view, reasonable.
- [13]Although there are profound problems with the plaintiff’s claim, I think the defendant ought to take some responsibility as well for not having taken steps sooner to bring this to a head. That is not to say she should be deprived of her costs of the proceeding; she should have an order in her favour, but I am not prepared to make an order on the indemnity basis in those circumstances. The days of passivity in relation to litigation are well and truly gone.
- [14]So I will give the plaintiff leave to discontinue the proceedings and I will further order that the plaintiff pay the defendant’s costs of the proceeding on the standard basis. I do not need to say anything about the Supreme Court scale because it will be assumed from the fact that it is a matter in the Supreme Court.