A.P. Motors (No 2) Pty Ltd v Balfour

[2024] QSC 110

SUPREME COURT OF QUEENSLAND

CITATION:

A.P. Motors (No 2) Pty Ltd v Balfour [2024] QSC 110

PARTIES:

AP MOTORS (NO 2) PTY LTD
ACN 010 585 243

(plaintiff)

v
SANDRA BALFOUR

(first defendant)

AND

STEWART ALEXANDER BALFOUR
(second defendant)

AND

MICHAEL DAVID BALFOUR
(third defendant)

FILE NO/S:

BS No 5288 of 2018

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

3 June 2024

DELIVERED AT:

Brisbane

HEARING DATE:

Written submissions received 8 March 2024 (plaintiff); and 15 March 2024 (third defendant)

JUDGE:

Brown J

ORDER:

The plaintiff is to pay 45 per cent of the third defendant’s costs of the applications filed 26 May 2022 and 7 June 2022 on the standard basis.

CATCHWORDS:

PROCEDURE – COSTS – ORDER FOR COSTS ON AN INDEMNITY BASIS – APPORTIONMENT OF COSTS – where two issues in this proceeding were listed for hearing and decided on 16 February 2024 – where the third defendant was partially successful in respect of the first issue before the Court and unsuccessful in respect of the second issue – where the parties were ordered to make submissions as to costs – where the parties agree on a rough apportionment of cots

Mio Art Pty Ltd v Macequest Pty Ltd (No 2) [2013] QSC 271, cited

COUNSEL:

N H Ferrett KC for the plaintiff
P W Hackett for the third defendant

SOLICITORS:

Lander & Rogers for the plaintiff
Londy Lawyers for the third defendant

1. Following delivery of reasons in this matter, the Court provided for the parties to make submissions as to costs.

2. There are two issues.  The court must determine:

   (a)who pays the costs of the plaintiff’s application dated 26 May 2022; and

   (b)who pays the costs of the third defendant’s application dated 7 June 2022.

3. The application of 26 May 2022 was made by the plaintiff, seeking leave to discontinue proceedings against the third defendant and orders that the plaintiff pay the third defendant’s costs until 6 May 2022 on a standard basis and that the third defendant pay the plaintiff’s costs of the application on an indemnity basis.

4. As to the application of 7 June 2022, it was made by the third defendant and sought:

   (a)orders dismissing the plaintiff’s claim against the third defendant for want of prosecution;

   (b)orders dismissing the plaintiff’s claims against the first and second defendants in relation to certain properties be dismissed for want of prosecution;

   (c)orders that the plaintiff pay:

   (i)the third defendant’s costs of proceedings on an indemnity basis,

   (ii)costs referred to in orders made by Bradley J made on 3 March 2022 on an indemnity basis; and

   (iii)the third defendant’s costs of the application on an indemnity basis;

   (d)further orders that the Court determine the amount of compensation or damages payable to the third defendant by reason of the effect upon him of the Freezing Order and consequential orders upon that order.

5. On 7 July 2022, Freeburn J ordered by consent that the plaintiff’s claims against the third defendant and in respect of two properties be dismissed and orders made against the first defendant be discharged in relation to two Caboolture properties and listed on the civil list for determination of two issues, namely:

   (a)whether the costs of the proceedings payable by the plaintiff to the third defendant should be assessed on the standard or indemnity basis (Issue 1); and

   (b)the assessment of any damages payable to the third defendant pursuant to the undertakings as to damages given by the plaintiff and AIG Insurance Limited (Issue 2).

6. Freeburn J ordered that the costs be costs in the proceedings. Thus, to the extent that the costs of the two applications are now sought, it is as to the costs that relate to the determination of Issues 1 and 2 above to the extent that his Honour otherwise ordered that costs be costs in the proceedings in respect of the other matters arising from the applications which were dealt with on 7 July 2022.

7. The Court, in ordering submissions be made as to costs, incorrectly referred to the third defendant’s application filed 26 May 2022 rather than 7 June 2022. Both parties agreed that was in error and that the decision of 16 February 2024 resolved both applications.

8. In my decision given on 16 February 2024 as to the two issues listed for civil hearing, the third defendant had substantial, but not complete, success in respect of Issue 1, insofar as I determined that he was to be paid the costs of the proceedings on a standard basis up until February 2020 but on indemnity basis from March 2020 until the proceedings were dismissed. Michael Balfour was unsuccessful in obtaining an order that the plaintiff pay him compensation under the undertakings given pursuant to the Freezing Order, which was Issue 2.

9. The parties agree that, rather than the Court ordering costs on an issue-by-issue basis, a “rough apportionment of costs ‘intelligently made’” is to be preferred.[1]

   [1]See Mio Art Pty Ltd v Macequest Pty Ltd (No 2) [2013] QSC 271 at [25]-[26] per Jackson J.

10. The plaintiff contends that the result justifies a departure from the usual position that costs follow the event. The plaintiff further contends that, if the hearing had been limited to the question of indemnity costs, it would have taken up much less time. 

11. The third defendant submits that the appropriate orders are that:

    (a)the plaintiff pay the third defendant’s costs of the applications filed 26 May 2022 and 7 June 2022 from 7 July 2022, insofar as they relate to the issue of costs of the proceeding; and

    (b)the third defendant pay the plaintiff’s costs of the application filed 7 June 2022 from 7 July 2022, insofar as they relate to the issue of the assessment of damages on the undertaking of damages.

12. Using the “rough apportionment” approach, the plaintiff contends that the appropriate orders would be that the third defendant pay 90 per cent of the plaintiff’s costs of the proceeding from 27 May 2022, on the standard basis, to take into account that the majority of the parties’ efforts had been directed to litigating the compensation issue on which the plaintiff was entirely successful and the relative success both parties enjoyed on the question of costs.

13. They also seek to vary the Court’s order of 16 February 2024 to provide that the plaintiff pay the third defendant’s costs until 26 May 2022, not 7 July 2022, when the proceedings were dismissed because the plaintiff did not act with undue delay after 26 May 2022. 

14. The third defendant contends, however, that the proceedings, pleadings and evidence relied upon in the trial were largely directed to the issue of whether costs should be awarded on an indemnity basis. For instance, it has calculated that 90 per cent of the paragraphs in the pleadings were devoted to the issue of indemnity costs and that the majority of the third defendant’s submissions and plaintiff’s submissions were devoted to the issue of indemnity costs.  According to the third defendant, it calculated that 56 per cent of the pages of the affidavits relied upon at hearing were devoted to the issue of indemnity costs and 83 per cent of the oral evidence given at the hearing was devoted to the issue of indemnity costs. 

15. The third defendant further contends that the plaintiff’s proposed order would also be inappropriate, particularly given the plaintiff’s case in relation to the question of compensation was limited to denying the validity of the third defendant’s case and involved it relying on little evidence to establish a contrary case, save a critiquing report as to costs.

16. I accept that the trial was largely devoted to the question of whether the plaintiff had a proper basis to continue to pursue the third defendant and maintain the freezing order.  I do not accept, however, that the application for compensation pursuant to the undertaking was simply an “add on”.  I consider that the plaintiff’s proposal would be disproportionate to its level of success. Similarly, I consider that while much argument was spent in relation to the question of costs and whether the plaintiff could properly maintain the freezing order and proceedings against the third defendant, an order that it pay 60 per cent of the third defendant’s costs of the applications filed 26 May 2022 and 7 June 2022 elevates the level of the third defendant’s costs to higher than would be fair and just given the outcome of the proceedings. I consider that the third defendant was successful in relation to a substantial part of his application and the plaintiff enjoyed more limited success in its application.    

17. While the plaintiff seeks a variation of order 2 previously made as it did not unreasonably delay after 26 May 2022 I do not consider, given my reasons that the order should be varied. It is appropriate the order extend until the dismissal of the proceedings, given my findings, particularly those at [165] of my reasons dated 16 February 2024.

18. I consider that in relation to the question of costs, Michael Balfour was generally successful in relation to costs of the two applications although the plaintiff had some limited success insofar as the Court found costs should be ordered on a standard basis until February 2020. Michael did not succeed in relation to Issue 2, which was the subject of his application of 7 June 2022. Adjusting for the Plaintiff having some success in limiting the amount of indemnity costs ordered and Michael Balfour not succeeding in relation to Issue 2, which represented less than half of the proceedings in terms of pleadings, evidence and the oral hearing, I consider that the appropriate order, using the “rough apportionment” approach, should be that the plaintiff pay 45 per cent of the third defendant’s costs of the applications filed on 26 May 2022 and 7 June 2022. I therefore consider the appropriate order is that the plaintiff pay 50 per cent of the third defendant’s costs on a standard basis.

    Orders

19. The order of the Court is therefore that the plaintiff is to pay 45 per cent of the third defendant’s costs of the applications filed 26 May 2022 and 7 June 2022 on the standard basis.