Davies v Chicago Boot Co Pty Ltd (No 2)

Davies v Chicago Boot Co Pty Ltd (No 2) involved the plaintiffs, who were liquidators of Harris Scarfe Wholesale Ltd and Harris Scarfe Limited, applying for costs on a solicitor-client basis against Chicago Boot Co Pty Ltd. The plaintiffs sought to recover payments they considered to be unfair preferences made by the Harris Scarfe Group to Chicago Boot. The case raised several legal issues, including whether the plaintiffs had proved insolvency at the relevant time, whether Chicago Boot acted in good faith, and whether the retention of title clause applied. The primary judge had ruled in favour of the plaintiffs, but the Full Court overturned this decision on some points.

The court was required to decide whether the plaintiffs were entitled to costs on a solicitor-client basis due to the defendant's failure to comply with pre-action procedure rules. Additionally, the court needed to determine the appropriate method for calculating interest on the award, whether at the time of the offer or the judgment, and whether it was appropriate to consider offers made in separate proceedings. The plaintiffs argued that the judgment award was more favourable than the offers made to the defendant, but the court found that this comparison was not valid due to the separate nature of the proceedings and the inability to apportion the awards between the entities.

The court concluded that the plaintiffs' application for costs on a solicitor-client basis should be refused. The reasoning was that the offers made to the defendant were not genuine offers of compromise, particularly given the negligible difference in interest forgone. Furthermore, comparing the offers with the final judgment awards was deemed inappropriate without a basis for apportioning the amounts between the entities. The court found no reasonable basis for departing from the usual practice of awarding costs on a party/party basis, and thus the application was refused.