Element Five Pty Ltd v Kingsland Group Pty Ltd (No. 2)

[2017] VCC 329

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted
Suitable for Publication

AT MELBOURNE

COMMERCIAL DIVISON
GENERAL LIST

Case No. CI-14-05811

ELEMENT FIVE PTY LTD	Plaintiff
v.
KINGSLAND GROUP PTY LTD	Defendant

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	3 April 2017
DATE OF JUDGMENT:	3 April 2017
CASE MAY BE CITED AS:	Element Five Pty Ltd v. Kingsland Group Pty Ltd (No. 2)
MEDIUM NEUTRAL CITATION:	[2017] VCC 329

REASONS FOR DECISION

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Catchwords:             Practice and procedure – Costs – Offer of compromise by the plaintiff – “Claim to which the offer relates” – Statement of claim served with the writ included a claim based on contract – Amendment after the offer introduced a quantum meruit claim – Plaintiff succeeded at trial on both contractual and quantum meruit claims – Both claims for amounts “no less favourable to the plaintiff than the terms of the offer” – Judgment entered for the amount of the quantum meruit claim which was slightly higher – Indemnity costs ordered in accordance with Rule 26.08(2)(b) County Court Civil Procedure Rules 2008 (Vic).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr K. Oliver of Counsel	Moray & Agnew Lawyers
For the Defendant	Mr R. A. Fink of Counsel	Mills Oakley

HIS HONOUR:

1I delievered judgment in this matter on 16 March 2017. There were a number of outstanding issues:

a.the amount of the judgment;

b.interest payable on the judgment sum;

c.the costs of the proceeding.

2I received written submissions from the parties on 31 March 2017, and heard further oral argument on 3 April 2017.

3After considering the further submissions, I have determined these further issues, as follows:

a.the plaintiff is entitled to judgment in the sum of $114,239.37;

b.in addition, the plaintiff should be awarded interest on that sum from 24 November 2014 (being the date of the issue of the writ) to the entry of judgment on 3 April 2017, at the rate prescribed in the Penalty Interest Rates Act 1983 (Vic) of $26,289.14, total judgment $140,528.51;

c.the plaintiff should, pursuant to Rule 26 be entitled to be paid its costs of the proceeding to 11am on 18 August 2015 on a standard basis and thereafter on an indemnity basis.

4There was no argument addressed by the defendant as to the amount of the judgment or the calculation of statutory interest. The only dispute was as to whether the plaintiff’s costs should be paid wholly on a standard basis.

5On 14 August 2015, the plaintiff served on the defendant on offer of compromise pursuant to Part 2 of Order 26 of the County Court Rules of Civil Procedure 2008. The plaintiff offered, “to compromise its claim against the defendant by accepting from the defendant the sum of FIFTY THOUSAND DOLLARS ($50,000) PLUS COSTS in full and final settlement of the plaintiff’s claim”.

6By the judgment, the plaintiff recovered $114,239.37 and interest of $26,289.14, a total judgment of $140,528.51. As at the date of the offer on 14 August 2015, the plaintiff would have been entitled to only minimal interest as a proportion of a total sum of $50,000.

7Rule 26.08(2)(b) provides that:

“Where an offer of compromise is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains a judgment on the claim to which the offer relates no less favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled...

b.in the case of any other claim of the plaintiff, to an order against the defendant for the plaintiff’s costs in respect of the claim before 11.00am on the second business day after the offer was served, taxed on the ordinarily applicable basis and for the plaintiff’s costs thereafter taxed on an indemnity basis”.

8The plaintiff sought its costs to be taxed solely on an indemnity basis, submitting that “the conduct of the defence by the defendant amount to a high-handed approach to the plaintiff’s claim and the proceeding”. I do not accept that this proceeding was such a case where the defendant should be penalised for its general conduct and approach to the claim.

9Alternatively, the plaintiff sought an order pursuant to Rule 26.08(2)(b). I consider that the plaintiff is entitled to such an order. The plaintiff succeeded at trial on both its claim based on the contract and the claim based on a quantum meruit. The claim on a quantum meruit was introduced by an amended statement of claim filed on 29 August 2016, more than one year after the offer of compromise was served.

10However, in my reasons for judgment, I stated, “I consider that Element Five should succeed on both claims”, that is the contract claim and the quantum meruit claim. I noted at that time that, “The contract claim is for a lesser sum than the quantum meruit claim”.

11The quantum meruit claim was for a slightly larger sum ($114,239.14) than the contractual claim ($96,363.35) and, subject to any further argument, I thought it appropriate to enter judgment for the larger amount. Both claims would have carried interest calculated in the same manner.

12In my view, the plaintiff has obtained a judgment on the contractual claim as well as the quantum meruit claim. The contractual claim has been a part of the plaintiff’s claim since the issue of the writ on 24 November 014, when it was articulated in the statement of claim attached to the writ.

13In his submissions, defendant’s counsel Mr Fink raised other matters:

a.the original statement of claim included claims for payment claim numbers 1 and 2 pursuant to the Building and Construction Industry Security of Payment Act 2002 (Vic);

b.these claims were not pursued at the trial. Instead the plaintiff sought declaratory relief, which I refused to entertain;

c.these matters “increased the length of the trial”;

d.the plaintiff “delivered a large quantity of material to the defendant at a late stage”;

e.the plaintiff “reopened its case to put evidence that it considered necessary”;

f.the “plaintiff’s solicitor was even called as a witness”;

g.“after final submissions, the plaintiff sought to present to the Court further factual information to make adjustments to the quantum of damages sought”.

14A general discretion is reserved to the Court under Rule 26.08(2) to “otherwise” order that costs should be paid differently than is specified in the Rule. I do not consider that there is any appropriate basis for the Court to deprive the plaintiff of any part of its costs. The matters raised by Mr Fink took little time to deal with and arose in circumstances where plaintiff’s counsel Mr Oliver was acting fairly and appropriately.

15On the other hand, the defendant was offered the opportunity, at a very early stage of the proceeding to resolve the contractual dispute between the parties, and not simply the interim issue of the payment claims. The offered sum was a significant discount on the amount which would ultimately have been recovered by the plaintiff on its contractual claim, even if the alternative claim based on a quantum meruit had never been brought.

16At trial, the defendant’s arguments on the issue of liability for the contractual claim were perfunctory and had little merit. Effectively, it was only the quantum of the plaintiff’s claim that was seriously challenged at trial. The defendant called no evidence itself on either the issue of liability or quantum.

17The orders the Court will make are as follows:

1.Judgment for the plaintiff against the defendant that the defendant pay to the plaintiff the sum of $114,239.37 together with interest of $26,289.14 pursuant to statute from 24 November 2014 to today, total judgment $140,528.51.

2.Within 7 days of authentication of these orders, the plaintiff’s solicitors must serve on Interspan Pty Ltd and Browns Piling Pty Ltd, by pre-paid post addressed to their respective registered offices:

a.        a copy of this order; and

b.a letter advising each company that the proceeding between Element Five Pty Ltd and Kingsland Group Pty Ltd concluded and the Court gave judgment in favour of Element Five Pty Ltd for a sum which included the following invoices (together with interest thereon pursuant to the Penalty Interest Rates Act 1983 (Vic) from 24 November 2014 to 3 April 2017), and which the plaintiff intends to pay to each company including statutory interest, upon the receipt of payment from the defendant:

i.invoice from Interspan Pty Ltd dated 24 April 2014 for $14,520.00 (including GST); and

ii.invoice from Browns Piling Pty Ltd dated 3 April 2014 for $7,975.00 (including GST).  

3.The defendant must pay the plaintiff’s costs of the proceeding (including all reserved costs) which, in default of agreement shall be taxed by the Costs Court on the ordinarily applicable basis up to and including 11.00am on 18 August 2015 and thereafter on an indemnity basis.

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Certificate

I certify that these 4 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 3 April 2017.

Dated: 3 April 2017

Carla Cianfaglione    

Associate to His Honour Judge Anderson