C.A.R.S Pty Ltd v Brent (No 2) - [2015] TASSC 26

[2015] TASSC 26

COURT: SUPREME COURT OF TASMANIA

CITATION: C.A.R.S. Pty Ltd v Brent (No 2) [2015] TASSC 26

PARTIES:  C.A.R.S. Pty Ltd
  v
  BRENT, John Charles
  BRENT, Peter Leonard

FILE NO:  793/2013
DELIVERED ON:  30 June 2015
DELIVERED AT:  Launceston
HEARING DATE:  4 June 2015
JUDGMENT OF:  Blow CJ

CATCHWORDS:

Procedure – Costs – Departing from the general rule – Conduct of parties – Misconduct etc – In proceedings – Conduct of case – Plaintiff unsuccessful against one of two defendants – Costs wasted by defendants putting plaintiff to proof of quantum of claim – Forgery of successful defendant's signature on guarantee not disclosed before action commenced.

Latrobe Council v Williams (2008) 18 Tas R 138, referred to.
Aust Dig Procedure [584]

REPRESENTATION:

Counsel:
           Plaintiff:  S B McElwaine SC
           Defendants:  G W Dietz
Solicitors:
           Plaintiff:  Rae & Partners
           Defendants:  SS Lawyers Pty Ltd

Judgment Number: [2015] TASSC 26
Number of paragraphs: 15

Serial No 26/2015
File No 793/2013

C.A.R.S. Pty Ltd v JOHN CHARLES BRENT
and PETER LEONARD BRENT (NO 2)

REASONS FOR JUDGMENT BLOW CJ

30 June 2015

On 4 June 2015 I decided that the plaintiff's claim against the first defendant must fail, but that its claim against the second defendant must succeed in full: C.A.R.S. Pty Ltd v Brent [2015] TASSC 23. The plaintiff's claim includes a component for compound interest. I deferred the making of final orders until today so that interest could be calculated. The parties have made written submissions as to interest and costs.
It has now been agreed that the quantum of the plaintiff's claim, including compound interest to today, is $1,811,926.90. There will be judgment for the plaintiff against the second defendant for that sum.
The deed of guarantee executed by the second defendant contained a covenant that he would indemnify the plaintiff against, amongst other things, all costs which the plaintiff incurred by reason of any default in Bunjurgen Pty Ltd making payment to it for goods sold and delivered. In accordance with that covenant, the plaintiff has sought an order for costs against the second defendant on an indemnity basis. The defendants have chosen to make no submissions as to that. Such an order accords with the terms of that covenant. There will therefore be an order that the second defendant pay the plaintiff's costs of and incidental to the action on an indemnity basis.

First defendant's application for costs

The first defendant, having succeeded in the action, has applied for an order that the plaintiff pay his costs. The plaintiff opposes that application. It contends that, as between it and the first defendant, each party should pay its own costs.
Ordinarily, when a plaintiff succeeds against one defendant but not another, that plaintiff should be ordered to pay the costs of the successful defendant: Latrobe Council v Williams (2008) 18 Tas R 138 at [14]. However the plaintiff contends that there are facts and circumstances by reason of which the usual order should not be made.
The first defendant succeeded because his signature on the deed of guarantee was forged. The plaintiff's solicitors wrote to him on 29 April 2013 demanding the payment of over $900,000, inclusive of interest, pursuant to the deed. According to his evidence, he was unaware that his signature had been forged on such a deed until that letter came to his attention. However neither he nor his solicitors told the plaintiff or its solicitors at that stage that the signature had been forged. That fact was not revealed to them until after this action had been commenced, and the writ and statement of claim had been served. It was revealed by the filing and service of a defence dated 30 September 2013. That pleading was filed on 3 October 2013. Witness statements relating to the forgery were subsequently delivered on or about 3 March 2014.
It was only at that stage that the plaintiff learned of the evidence that was to be led from the first defendant and the defendants' handwriting expert as to the forgery. At least until that point, it was reasonable for the plaintiff to continue to proceed against the first defendant.
On 15 July 2014 the plaintiff's solicitors wrote to the defendants' solicitors making a proposal in relation to the forgery issue. That letter was headed "Without Prejudice Save as to Costs". The plaintiff now contends that the proposal in that letter amounted to a Calderbank offer: Calderbank v Calderbank [1976] Fam 93. The plaintiff's solicitors foreshadowed that, if this Court were to find that the signature of the first defendant was forged, then a separate action would be commenced against Sally Brent and Matthew Brent, his children, for misleading or deceptive conduct. Against that background, the plaintiff's solicitors went on to propose the following course of action:
"1John Brent [the first defendant] provides to this firm, on behalf of our client, a statutory declaration, on oath [sic], and which is to the same effect as his signed witness statement delivered in this action;
2Upon the commencement of the trial counsel for the plaintiff will inform the court of the existence of the statutory declaration and that if John Brent gives evidence at the trial in accordance with it then the plaintiff will not for the purposes of the trial challenge that evidence and will accept the contention that the signature of John Brent is a forgery and that, in consequence, judgment must be entered in his favour;
3The action will then proceed against Peter Brent [the second defendant] in order to determine his liability;
4John Brent will agree to be a witness in any subsequent proceeding for misleading or deceptive conduct, limited to the evidence disclosed in the statutory declaration; and
5As between the plaintiff and John Brent, each will pay their own costs of this action."
The letter stated that that offer remained open for 21 days. There was no response from the defendants' solicitors. The offer therefore expired at the end of the 21 days.
The plaintiff contends that it was unreasonable for the first defendant not to accept that offer. I disagree. It was not an offer to discontinue the action against him before trial. It was an offer to spare him from cross-examination and abandon the claim against him during the trial, in return for co-operation, and promises of future co-operation, in relation to a proposed proceeding against his daughter and his son. The first defendant had every reason to be confident that the claim against him would fail, subject perhaps to the possibility of him giving one or more answers under cross-examination that could give the plaintiff a case against him when it went to trial without one.
The plaintiff has not been substantially disadvantaged by the non-acceptance of that offer. Although no statutory declaration was provided, the first defendant gave evidence on oath before me that the signature was a forgery, and so did the defendants' handwriting expert. If an action against the first defendant's children proceeds to trial, both he and that expert will be compellable witnesses.
When the case proceeded to trial, the plaintiff put the defendants to proof in relation to the forgery issue, and the defendants put the plaintiff to proof as to the quantum of its claim. The couple who controlled the plaintiff company had to give evidence as to the contractual arrangements made with Bunjurgen Pty Ltd and produce substantial quantities of financial records documenting the sale and delivery of vegetables from June 2011 to November 2012. Dozens of invoices were produced. The evidence was substantial, thorough, tedious and entirely uncontroversial. The result was inevitable. The plaintiff's witnesses and their counsel did not make any mistakes. The claim was properly proved. Counsel for the defendants conceded that in his closing speech.
If the plaintiff had discontinued the action as against the first defendant before trial, after scrutinising the handwriting evidence, that would not have made a great difference to the costs of this action. That is because the defendants were represented by the same solicitors and counsel, and because the second defendant's case was based upon the first defendant's signature having been forged. It was solely on the basis of that forgery that the second defendant contended – unsuccessfully – that the plaintiff could not or should not succeed against him. If the case had proceeded to trial against him alone, it would still have been necessary for the first defendant and the handwriting expert to have given evidence in relation to the forgery. Some time was taken up at the trial during the cross-examination of the first defendant by counsel testing him as to his contention that he had not known or approved of the forging of his signature. However the trial would not have been substantially shorter if the plaintiff had discontinued as against the first defendant beforehand.
I regard it as very significant that bringing an action against the second defendant alone, and taking that action to trial, would not have been substantially less costly than bringing this action against both defendants, and taking it to trial as against both defendants. Because of that, I think that if any costs order were to be made in favour of the first defendant, it should be limited to the additional costs incurred as a result of the plaintiff prosecuting the action against both defendants, rather than only the second defendant. However I am not prepared to make such an order in this case, for two reasons. The first is that the defendants caused the plaintiff to incur costs unnecessarily, and wasted Court time, by putting the plaintiff to proof of the quantum of its claim, which the plaintiff proved in full. The second is that it was unreasonable for the defendants not to inform the plaintiff or its solicitors after demand was made and before proceedings were commenced that the signature of the first defendant had been forged on the deed of guarantee. There is a possibility, though admittedly only a possibility, that he would not have been joined as a defendant if that had been known at that stage.
I have therefore decided to refuse the first defendant's application for costs.