Queensland Judgments
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Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd (No 3)

Unreported Citation:

[2022] QSC 62

EDITOR'S NOTE

In this significant costs judgment, Williams J considered several important issues arising from the making of “all up” offers, both under the UCPR regime and as Calderbank offers. Ultimately, her Honour found that while the offers were “all up” they were sufficiently clear and materially better than the ultimate judgment for the plaintiff, and so cost consequences followed from the plaintiff’s refusal.

Williams J

22 April 2022

This is the third judgment in proceedings between the parties. In the first, Williams J determined the merits of the claim and counterclaim, while in the second, her Honour dealt with outstanding issues for calculating the final judgment amount, including interest. [1]. Ultimately, on 26 November 2021, her Honour ordered that the defendant pay the plaintiff $459,354.38 plus interest in the amount of $209,307.30. [3]. The question at issue in this, the third judgment, was how to assess the parties’ costs. This question arose from the defendant having made two offers to settle the proceedings:

a) an offer made on 21 June 2018, purportedly under the Uniform Civil Procedure Rules 1999 (“UCPR”) to settle all claims for $1,850,000 plus interest and costs on a standard basis (“the UCPR Offer”); and

b) a Calderbank offer also made 21 June 2018 to pay the sum of $2,250,000, inclusive of interest and costs, to settle the whole proceeding (“the Calderbank Offer”). [9].

The UCPR Offer

Williams J first dealt with the consequences of the UCPR Offer. As to this, her Honour observed that, while the starting point under r 681 UCPR was that each party would bear its own costs, this position was altered under rr 360–361 UCPR, which deal, respectively, with costs if the plaintiff and the defendant make an offer to settle that is more favourable to the plaintiff than the final judgment. [121]–[124].

On its terms, the UCPR Offer was made to fully and finally settle both the plaintiff’s claims and the defendant’s counterclaims. [128]. However, the question arose whether the UCPR Offer was properly made under Ch 9 Pt 5 UCPR such that it enlivened rr 360 and 361 UCPR. [127]–[128].

Under r 353(1), a “party to a proceeding may serve on another party to the proceeding an offer to settle 1 or more claims in the proceeding on the conditions specified in the offer”. [129]. “Proceeding” is, in turn, defined in r 352 UCPR. [130]. However, this definition does not expressly include a counterclaim. [130]–[132]. Following Wiggins Island Coal Export Terminal Pty Ltd v Civil Mining & Construction Pty Ltd (2021) 7 QR 1 (“Wiggins Island v CMC”) at [27], Williams J found that the “proceeding” referred to in r 353 UCPR was the principal proceeding commenced by the plaintiff, and that the word “claim” in r 353 UCPR encompasses “all causes of action or claims for relief”, including a counterclaim. [132]–[134].

Williams J next turned to whether or not the UCPR Offer was a “non complying offer”. [136]. The UCPR Offer included interest “pursuant to the Civil Proceedings Act 2011” (“interest term”), and was subject to entry into “a mutually acceptable deed of settlement and release reflecting the terms in this Offer” (“deed term”). [137]. The plaintiff submitted that the inclusion of non-monetary terms in the offer meant that it did not fall within the scheme of Ch 9 Pt 5 UCPR.

As to the interest term, Williams J found that, while it did not specify a rate of interest, it was “arguably able to be ascertained”, such that it was sufficiently certain to be a “rule-compliant” term. [159(a)]. As to the deed term, her Honour considered that the mere inclusion of a non-monetary term did not render the offer non-compliant. [159(b)]. Rather, because the terms of the deed were to be restricted to terms “reflecting the terms in this Offer”, it avoided the problem of conditions “on terms to be agreed” and so was rule-compliant. [159(b)].

Williams J next considered whether or not the UCPR Offer, as an “all up” offer, could be compared with the judgment such that rr 360-361 UCPR applied, given there was a claim and a counterclaim made in the case. In Wiggins Island v CMC, both at first instance and on appeal, the Court found that rr 360–361 UCPR could not be applied where there were separate judgments on the claim and on the counterclaim, but the offer was framed as being “all up”. [163]–[165]. However, Williams J noted that here there was a single judgment in respect of the claim and counterclaim. [166]. As to this distinction, her Honour picked up reasoning by Holmes CJ in Wiggins Island v CMC at [42] (Philippides JA and Brown J expressly did not decide this point) that an offer may both comply with r 353 UCPR and “trigger” rr 360–361 UCPR even if it does not separately quantify the amount for the claim and counterclaim. [168]–[171]. Williams J found that a contrary conclusion would be inconsistent with both the text of the relevant rules and the purpose of the UCPR and its costs regime more generally. [172]–[181].

Turning finally to the assessment under r 361, Williams J considered that the “comparison is between the overall effect of the judgment and the offer, rather than a precise correlation between all elements of the offer and judgment”. [206]. As her Honour construed the deed term as being a term that merely formalises the offer, it was sufficiently certain that it can be compared with the judgment. [211]. In undertaking this comparison, her Honour found that the UCPR Offer was more favourable to the plaintiff than the final judgment, and so ordered costs as set out in r 361(2) UCPR. [213]–[215].

The Calderbank Offer

In respect of the Calderbank Offer, the issue in dispute was whether it was reasonable for the plaintiff to reject the offer. [222]. As a threshold issue, Williams J considered that the party seeking the indemnity costs order has the onus of showing that the other party’s failure to accept it was unreasonable. [225]–[227].

The plaintiff submitted that as the Calderbank Offer was an all up offer which did not provide a breakdown of how the settlement amount was calculated, it was either insufficiently precise to be a Calderbank offer, or it was reasonable for the plaintiff to refuse the offer. [229]. Williams J disagreed, holding that the award of indemnity costs involves the exercise of a discretion which must be exercised in all of the circumstances. [235]. Her Honour considered that there is no rule that the Court cannot exercise its discretion on the basis of a Calderbank offer which is inclusive of costs. [235].

Williams J also found that, although the reasonableness of a Calderbank offer is to be assessed as at the time of the offer, whether the arguments made in the Calderbank letter were later accepted by the Court is a relevant consideration. [262]. Further, the “ability to give proper consideration to an offer depends on whether the terms are sufficiently clear”. [261]. As such, all up offers may both give rise to difficulties in terms of both the offeree and the Court being able to assess the offer. [261]. However, Williams J did not consider those difficulties to be insurmountable. [261].

In the event, Williams J held that it was unreasonable for the plaintiff not to accept the Calderbank offer. [303]–[307].

M Paterson

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