F & J Investment Assets Pty Ltd v Etcell (Costs)
[2024] VCC 822
•7 June 2024
Issue 2
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-19-00242
| F & J Investment Assets Pty Ltd (ACN 621 866 180) as trustee for The Mustafa Property Trust | First Plaintiff |
| and | |
| Jetmir Mustafa | Second Plaintiff |
| and | |
| Florije Mustafa | Third Plaintiff |
| v | |
| Paul Etcell | Defendant |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 3 June 2024 (Written submissions) | |
DATE OF JUDGMENT: | 7 June 2024 | |
CASE MAY BE CITED AS: | F & J Investment Assets Pty Ltd v Etcell (Costs) | |
MEDIUM NEUTRAL CITATION: | [2024] VCC 822 | |
REASONS FOR JUDGMENT
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Subject: COSTS
Catchwords: Costs of the proceeding – Offer of compromise – Judgment “no less favourable” than Plaintiffs’ offer - Whether the Court should “otherwise order”.
Legislation Cited: Order 26, County Court Civil Procedure Rules 2018
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr R A Harris | MGA Lawyers |
| For the Defendant | Ward & Co. Legal Consultants | Ward & Co. Legal Consultants |
HIS HONOUR:
1Judgment was delivered in this matter on 7 May 2024 ([2024] VCC 594). On 31 May 2024, orders were made as to interest on the judgment. The orders included the following paragraph:
2.By 3 June 2024 at 4:00 pm, the parties must file and serve any submissions on the issue of the costs of the proceeding.
2In accordance with the order, the Plaintiffs and the Defendant filed written submissions on 3 June 2024. I propose to now determine the question of the costs of the proceeding.
3The Plaintiffs submitted that:
a. a costs order should be made in favour of all Plaintiffs;
b. the costs order should include all reserved costs;
c. the Defendant should pay the Plaintiffs’ costs on a standard basis to be taxed in default of agreement up to and including 11.00 am on 18 June 2021;
d. thereafter, the Defendant should pay the Plaintiffs’ costs on an indemnity basis.
4The Defendant submitted that the Plaintiffs ought not be awarded any costs:
a. prior to 18 February 2022, as no plea of rectification was made before the 3FASOC of that date;
b. of the original witness statements of Mr Mustafa and Mrs Mustafa dated in May 2021, as they were superseded by later statements dated in August 2022;
c. of the identical paragraphs repeated in the various statements of Mr and Mrs Mustafa;
d. of the seven original reply statements by the Plaintiffs’ witnesses in June 2021, which were superseded by later primary statements by those witnesses in August 2022;
e. of the three expert reports of Douglas Buchanan, by reason of the methodology adopted by Mr Buchanan and the Court’s lack of reliance upon [parts of] Mr Buchanan’s reports;
f. of a proportion of the costs associated with the expert evidence of Matthew Osborne, because of “the utility of the totality of his evidence”;
g. on an indemnity basis, in the exercise of the Court’s discretion not to allow such costs other than in exceptional cases and as the Plaintiffs “in fact succeeded on a small portion of its claim”.
5During the proceeding, the Plaintiffs made three offers of compromise in accordance with Order 26 of the Rules of Court, on the following dates and in respect of the following amounts:
a.28 April 2021, $1,000,000.00;
b.16 June 2021, $750,000.00; and
c.7 October 2022, $580,000.00.
6The offers of compromise each had the following common features:
a. they were served in accordance with Order 26 of the County Court Civil Procedure Rules 2018;
b. they remained open to be accepted until the expiration of at least 14 days after service of the offer;
c. they offered to compromise the proceedings by accepting from the Defendant / Plaintiff by Counterclaim the stated sum inclusive of costs, payable to the Plaintiffs within ninety (90) days of the date of acceptance, in full and final settlement of the Plaintiffs’ claims and the Defendant’s counterclaims.
7Pursuant to Order 26.05, I must disregard interest included in the judgment sum after the date of service of any offer of compromise.
8The appropriate calculations of interest included in the judgment sum from the commencement date of 27 January 2019, in respect of each offer of compromise, are as follows:
Start date Offer date Days Interest Total 27 Jan 2019 28 Apr 2021 822 $147,310.77 $801,427.93 27 Jan 2019 16 Jun 2021 871 $156,092.68 $810,209.23 27 Jan 2019 7 Oct 2022 1349 $241,754.53 $895,871.69 9I am satisfied that:
a. the second offer by the Plaintiffs was an offer that was at least as favourable as the judgment sum (disregarding later interest), that I ordered on 7 May 2024 should be paid by the Defendant to the First Plaintiff;
b. additionally, the judgment for payment of a specified amount to the First Plaintiff, the order for rectification of the Building Contract and the declaratory relief included in the orders made by the Court on 7 May 2024 was beneficial to all Plaintiffs;
c. the offers satisfied the formal requirements of Order 26.
10Accordingly, it is appropriate that orders should be made in the terms sought by the Plaintiffs and, generally, for the reasons expressed in the Plaintiffs’ submissions.
11In relation to the matters raised by the Defendant in his submissions on costs:
a. the Plaintiffs were successful in obtaining an order for rectification. The issue of the appropriate contracting party was raised by the Defendant. It was an issue of little consequence or merit. The Defendant was unsuccessful on the issue and should bear the Plaintiffs’ costs of the issue;
b. I make no comment on the matters raised by the Defendant in relation to the Plaintiffs’ witness statements. That is a matter best left to the Costs Court, if it needs to be determined;
c. in relation to Mr Buchanan’s reports, the Defendant’s submissions are not wholly accurate. I made some comments about sections of Mr Buchanan’s reports in my reasons for judgment. In part, I accepted the opinions of Mr Buchanan. In other parts, I was critical of his reports. How those comments by me bear on the issue of the costs the Plaintiffs are entitled to in relation to Mr Buchanan’s reports, is a matter which I also consider the Costs Court is better able than me to adjudicate upon;
d. in relation to Mr Osborne’s reports and evidence, I reject the criticisms of Mr Osborne made by the Defendant in his submissions. On a number of occasions in my reasons for judgment, I was required to consider the evidence of Mr Osborne in relation to issues of both liability and quantum. I do not recall any criticism by me of Mr Osborne’s methodology. I frequently preferred his evidence, both from his reports and orally, to the evidence of the Defendant’s expert witnesses. I reject the Defendant’s submission made as a result of comparing the original assessments made by Mr Osborne with the amounts the First Plaintiff ultimately recovered. In my reasons for judgment, I discussed the Court processes engaged in by the experts. Mr Osborne, in my judgment, appeared to participate entirely appropriately in relation to those processes. I can see no reason why the costs associated with the expert evidence of Mr Osborne should be treated otherwise than as it would be for any other successful litigant. Ultimately, the matter would be for the Costs Court to determine;
e. Order 26.08(2) gives the Court the power, if a plaintiff obtains a judgment no less favourable than an offer of compromise made by the plaintiff in accordance with the Rules of Court, to order otherwise than to grant indemnity costs. In the present case, I can see no basis for the proper exercise of that residual power.
Orders
13In the circumstances, the following orders are made by the Court:
1.The Defendant must pay the Plaintiffs’ costs of the proceeding.
2.The Plaintiffs’ costs are to include all reserved costs.
3.The Plaintiffs’ costs are to be paid by the Defendant on a standard basis up to and including 18 June 2021 at 11.00am.
4.After 18 June 2021 at 11.00am, the Plaintiffs’ costs are to be paid by the Defendant on an indemnity basis.
5.In default of agreement, the Plaintiffs’ costs are to be taxed by the Costs Court.
Certificate
I certify that these 7 pages are a true copy of the ruling of His Honour Judge Anderson delivered on 7 June 2024.
Dated: 7 June 2024
Tracey Huang
Associate to His Honour Judge Anderson
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