Frew v Morgan

[2010] QDC 7

DISTRICT COURT OF QUEENSLAND

CITATION:

Frew v Morgan & anor [2010] QDC 7

PARTIES:

MALCOLM FREW
(plaintiff)

v
GREGORY JOHN MORGAN
(first defendant)

and

MOBILE DIAGNOSTICS PTY LTD ACN 099 117 085 as Trustee for the Morgan Family Trust trading as AUTOQUIP
(second defendant)

FILE NO/S:

D237/09

PROCEEDING:

Costs Application

ORIGINATING COURT:

District Court Southport

DELIVERED ON:

2 February 2010

DELIVERED AT:

Southport

HEARING DATE:

18 November 2009 (at Brisbane)

JUDGE:

Newton DCJ

ORDER:

That the first and second defendants pay the plaintiff’s costs of and incidental to the proceedings to be assessed on a standard basis on the scale applicable where the amount recovered is in excess of $50,000.

LEGISLATION:

Supreme Court Act 1995
Uniform Civil Procedure Rules 1999, Rule 697

CATCHWORDS:

Co-defendants – costs to follow the event.

COUNSEL:

Mr P J Hackett for the plaintiff

First defendant in person

SOLICITORS:

MSB Lawyers for the plaintiff

1. In this matter the plaintiff claimed the sum of $104,000 being monies owing for two loans, $40,000 and $64,000 made by the plaintiff to the first defendant or alternatively the second defendant on 20 October 2005 and 31 March 2006.  Interest on the $40,000 loan was also claimed pursuant to the Supreme Court Act 1995, and interest on the $64,000 loan was claimed at the rate of 20 percent pursuant to the loan agreement. Costs were also claimed.

1. A counterclaim was maintained by both the defendants.

1. Judgment was given on 24 July 2009 in the following terms:

1.          Judgment for the plaintiff against the first defendant in the sum of $40,000 together with interest at 10 percent per annum from the date of demand of 4 December 2007 in the amount of $6,377.15;

2.          Dismiss that part of the plaintiff’s claim in respect of $40,000 advance against the second defendant;

3.          Judgment to the plaintiff against the second defendant in the sum of $62,951 together with interest at 20 percent per annum from 20 October 2005 to the date of judgment in the amount of $47,351.18;

4.          Dismiss that part of the plaintiff’s claim in respect of the $62,951 advance against the first defendant; and

5.          Order that the counterclaim of the first and second defendants be dismissed.

1. In my judgment delivered on 24 July 2009 I indicated that I would, if required, hear submissions with respect to costs on a date to be fixed.  Subsequently, on 18 November 2009, submissions as to costs were made by the parties.  I reserved my decision.

1. At the trial of this matter the plaintiff’s claims were disputed by each defendant:

(a)        the claim for $40,000 on the basis that it was the acquisition of a partnership interest and not a loan; and

(b)        the claim for $62,951 on the basis that the only amount owing by the second defendant company to the plaintiff was $9,348.50.

1. The correct identification of the proper defendant was an issue in respect of each claim.  As originally pleaded the claim was solely in respect of the first defendant.  The second defendant was joined at the outset of the trial.  That joinder has undoubtedly avoided the necessity of having two trials. 

1. The plaintiff now seeks an order that the first and second defendants pay the plaintiff’s costs of and incidental to the proceedings to be assessed on a standard basis on the scale applicable where the amount recovered is in excess of $50,000.  The first defendant seeks orders that costs be awarded to the first defendant in respect of the dismissal of the plaintiff’s claim against the first defendant in respect of the $62,951 advance, and further that the second defendant (now said to be in liquidation) should have its costs in respect of the dismissal of that part of the plaintiff’s claim against it with respect to the $40,000 advance.

1. Rule 697 (1) and (2) of the Uniform Civil Procedure Rules 1999 provide:

“697 COSTS OF PROCEEDING IN WRONG COURT

(1)Subrule (2) applies if the relief obtained by a plaintiff in a proceeding in the Supreme Court or District Court is a judgment that, when the proceeding began, could have been given in a Magistrates Court.

(2)The costs the plaintiff may recover must be assessed as if the proceeding had been started in the Magistrates Court, unless the court orders otherwise.”

1. In this matter, at the commencement of the action, the plaintiff’s claim was for $104,000 comprising two loans or advances of $40,000 and $64,000 respectively.  There was a real issue in the proceeding as to which defendant was responsible for each loan.  The plaintiff has succeeded in his claim against each defendant in respect of one loan.  That relief could not have been given in the Magistrates Court.

1. It would clearly have been quite inappropriate to have commenced one proceeding in the Magistrates Court for the $40,000 loan and another proceeding in the District Court for the $64,000 loan.  Had that course been followed the actions would have been consolidated and heard in the District Court.

1. I accept that it was in this case appropriate to conduct one trial in respect of both loans, and that there should in the circumstances be one costs order.

1. As to the submissions made by the first defendant in relation to costs, it is important to bear in mind that the issues in the actions overlapped as against both defendants.  Furthermore, to all intents and purposes Mr Morgan was Autoquip and no overt act was evidenced by Mr Morgan (the first defendant) to alert the plaintiff to any change in the structure of the business.  In these circumstances there is no basis for making different costs orders according to which of the two defendants has been held liable to pay which of the two loans.  The submission by the first defendant that the $64,000 loan was not resisted by the second defendant cannot be accepted.  There was no concession in this regard pleaded in the counterclaim.  Furthermore, the so-called offer by the second defendant to repay to the plaintiff $32,000 and to maintain the lease payments on the Honda motor vehicle which would remain in the plaintiff’s possession, was not an offer forthcoming from the company but from Mr Morgan.  The motor vehicle was not the property of the first defendant and could not therefore comprise an asset which Mr Morgan could include in any offer made by him.  Indeed, the plaintiff at no stage sought to retain the use of the Honda motor vehicle.

1. I order that, the first and second defendants pay the plaintiff’s costs of and incidental to the proceedings to be assessed on a standard basis on the scale applicable where the amount recovered is in excess of $50,000.