Hallam, Murray James and Gail Margaret Hallam v Ross James , Burns, Diane Maria Burns (AKA Diane Maria Cavallaro), Glenn Dalby, Susan Margaret Dalby

[1998] QSC 285

IN THE SUPREME COURT

OF QUEENSLAND

No.  1641  of 1998
Brisbane

Before             Williams J

[[Hallam v Burns & Anor]]

BETWEEN:

MURRAY JAMES HALLAM and

GAIL MARGARET HALLAM

Plaintiffs
AND:

ROSS JAMES BURNS

First Defendant
AND:

DIANE MARIA BURNS

(AKA DIANE MARIA CAVALLARO)

Second Defendant

AND:

GLENN DALBY

Third Defendant

AND:

SUSAN MARGARET DALBY

Fourth Defendant

CATCHWORDS:                 Order - offers to settle - costs - appropriate scale.

Counsel:  J N O’Donoghue (solicitor) for plaintiffs.

C Wilson for defendants

Solicitors:  J N O’Donoghue for plaintiffs

Macgillivrays for defendants

Hearing Date:  15 December 1998

JUDGMENT - WILLIAMS J

Judgment delivered 17 December  1998

1. On 11 December 1998 I published reasons for judgment in this matter and therein recorded that the plaintiffs were entitled to contribution from the defendants with respect to the sum of $15,600.  I also ruled that the plaintiffs were entitled to interest for a period of three years at 8% per annum.  The matter was adjourned to enable the parties to consider the appropriate form of order, including orders as to costs.

2. I have now heard submissions on the form of order and with respect to costs, and as the parties were not in agreement it was necessary that I give reasons for my decision particularly with respect to costs.  The defendants, who were represented at the trial by one counsel, intimated that they were agreed that judgment could be entered against them (jointly and severally) for the amount in question.  The plaintiffs had paid, as sureties, the sum of $15,600 and they were entitled to contribution from the other two sets of sureties.  In the circumstances the plaintiffs are entitled to judgment against the defendants for $10,400.

3. There was an argument as to whether interest at 8% per annum for a period of three years should be calculated on the total sum of $15,600, or only on the $10,400 payable by the defendants.  Though the plaintiffs paid out $15,600, in equity they were always obliged to pay $5,200, and in consequence they have only been out of pocket for the sum of $10,400.  Interest therefore should be allowed only on the $10,400; it was agreed that amounted to $2,496.

4. It follows that the plaintiffs are entitled to judgment against the defendants for $12,896 including interest.

5. For reasons which will become obvious the plaintiffs will be obliged to pay to the defendants a sum for costs well in excess of that amount.  In consequence the defendants submitted that execution on the judgment should be stayed until costs had been taxed and a net balance struck between the amount payable by the plaintiffs to the defendants and the amount payable by the defendants to the plaintiffs.  I reject that submission.  There is no reason why the ordinary rules should not apply.  If the $12,896 is not paid by the defendants within a reasonable time then the plaintiffs should be entitled to execute with respect thereto.

6. There should also be an order that the plaintiffs deliver to the first and second defendants duly executed releases in registrable form of the mortgages given by those defendants over the house and land at Holland Park and the land at Coochiemudlo Island upon receipt of the sum of $12,896.

7. The situation with respect to costs is complicated.

8. The plaintiffs commenced the proceedings in the District Court by filing a plaint on 12 November 1996 claiming $107,618 plus interest.  As noted in the principal reasons for judgment the plaintiffs made demand for payment of that sum and had taken steps to be in a position to exercise power of sale over the Coochiemudlo land if it was not paid.  In consequence by originating summons filed in this Court on 18 December 1996 the defendants asked that the District Court proceedings be transferred to the Supreme Court and that an interlocutory injunction be granted restraining the plaintiffs from exercising power of sale pending the determination of the action.  The latter order was sought on the basis that the plaintiffs were owed nothing.

9. On 19 December 1996 Dowsett J ordered that the action be transferred to the Supreme Court, that there be an injunction as claimed, that there be a certification for a speedy trial, and that costs be reserved.

10. Thereafter the matter proceeded in the Supreme Court.

11. On 6 February 1997 the defendants made an offer to settle, the terms of which were that the defendants pay to the plaintiffs the sum of $20,000 inclusive of interest and costs.  That offer was not accepted.  Then on 10 March 1998 the defendants made a further offer to settle in terms of the defendants paying to the plaintiffs $22,000 inclusive of interest together with the plaintiffs’ reasonable party and party costs to be taxed.  Again that offer was not accepted.  In the circumstances it is not necessary to refer to a further offer to settle made by the defendants on 30 April 1998, and an offer by the plaintiffs to settle dated 8 May 1998.

12. On 24 June 1998 the defendants filed a summons returnable 7 July 1998 seeking leave to amend their defence and counterclaim, leave to deliver interrogatories, and an order that the plaintiffs file a supplementary affidavit of documents.  On 3 July 1998 the plaintiffs filed a summons returnable 7 July 1998 seeking an order that the plaintiffs be at liberty to enter the matter for trial notwithstanding the absence of a certificate of readiness.  Both summonses were heard together before Derrington J on 7 July 1998 (the return day of each summons) and the one order was made.  It is not necessary to set out full details of that order;  suffice it to note the following:

    (i)the defendants were given leave to amend their defence and counterclaim;

    (ii)the defendants were ordered to pay the plaintiffs’ costs thrown away by reason of the amendments made;

    (iii)otherwise “the party’s costs be their costs in the cause”.

13. There was reference before me during argument on costs to some adjournment on 3 July 1998, but I can find no reference to that on the court file; indeed, as noted above, each of the summonses was made returnable on the same day, namely 7 July 1998.

14. It is clear from a reading of the order of 7 July 1998 that Derrington J fully dealt with costs relating to each of those summonses and in consequence there is nothing reserved to the trial judge.  The plaintiffs are entitled to their costs thrown away by the amendments, and otherwise costs are each party’s costs in the cause.

15. Thereafter the matter proceeded until trial; the hearing took place over three days, 12, 13 and 14 October 1998.

16. As already noted judgment was ultimately given for the plaintiffs against the defendants for $12,896.  The defendants submit that if costs were assessed as at 6 February 1997, the date of their first offer to settle, the plaintiffs would not have beaten that offer.  It is difficult, if not impossible, to determine whether or not that would be so.  By then there had been the proceedings commenced in the District Court and the proceedings in the Supreme Court determined by Dowsett J.  If the question who should pay the costs of proceedings before Dowsett J was considered as at 6 February 1997 on the basis that the offer of that date was accepted, it may well be that the defendants would have been ordered to pay the plaintiffs’ costs.  The defendants had claimed relief on the basis that no money was owing, but that was proven to be wrong.  If the plaintiffs were allowed the full interest referred to above ($2,496), costs of the proceedings before Dowsett J, and the costs of filing and commencing the proceedings in the District Court, it may well be that they would have recovered more than the all up offer of $20,000.  In order to determine that strictly there would have to be a taxation of all costs up to 6 February 1997.  Given the amounts involved such an exercise would defeat the purpose of the offer to settle rule.  More money would be expended than was justifiable in order to determine whether or not the plaintiffs had beaten the offer.  There was not a great deal of activity between February 1997 and March 1998.  In all the circumstances of this case, and in the exercise of my discretion, I rule that the defendants have not established that the plaintiffs failed to beat the offer of February 1997.

17. But clearly the plaintiffs have failed to better the offer of 10 March 1998.  It follows that from 10 March 1998 the plaintiffs must pay the defendants’ costs.

18. It remains to consider on what scale those costs should be determined.  As noted above the action was commenced by the plaintiffs in the District Court and the amount ultimately recovered was strictly within the jurisdiction of the Magistrates Court.  The matter was transferred to the Supreme Court because the defendants wished to have the protection of the injunction restraining the sale of the property.  Counsel for the defendants submitted that the matter had to remain in the Supreme Court because of the relief the defendants sought in their counterclaim.  That relief was a declaration that there were no monies owed by the defendants to the plaintiffs, and an order that the plaintiffs deliver to the first and second defendants releases of the mortgages in registrable form.  That counterclaim certainly did not add anything to the time spent on preparing for trial or on the time for hearing;  the relief claimed was a mere formality.  In my view the position of the defendants would have been adequately safeguarded by allowing the injunction to remain in place until the determination of the principal action in the District Court.  Once it had been determined what, if anything, the defendants owed the plaintiffs the injunction could have been lifted.  In the unlikely event of the plaintiffs not executing releases of the mortgages in registrable form after payment of the amount found to be due relief could readily have been obtained in the Supreme Court.

19. In my view both the costs recoverable by the plaintiffs to 10 March 1998, and the costs payable by the plaintiffs after that date should be assessed on the District Court scale.  So far as the plaintiffs’ claim is concerned that scale should be the one appropriate to $12,896, whereas the costs payable by the plaintiffs to the defendants should be assessed on the scale appropriate to a claim of $200,000.

20. It only remains to determine how the costs reserved by Dowsett J should be paid.  At all times the plaintiffs have persisted in claiming much more than the amount to which they were entitled and much more than the amounts of the offers to settle.  The defendants were clearly justified in obtaining and maintaining the injunction.  Those costs should be taxed on the Supreme Court scale and paid by the plaintiffs to the defendants.

21. My orders will therefore be:

    (1)the defendants pay to the plaintiffs the sum of $10,400 by way of contribution, together with $2,496 being interest at 8% per annum for three years, a total of $12,896;

    (2)that upon payment of the sum of $12,896 the plaintiffs deliver up to the first and second defendants releases in registrable form of mortgages J72234 and J69214, together with all relevant documents of title;

    (3)that the defendants pay the plaintiffs’ costs of the plaintiffs’ claim on a party and party basis to be taxed on the District Court scale appropriate to recovery of the sum of $12,896 from the commencement of the action on 12 November 1996 to 10 March 1998;

    (4)that the plaintiffs pay the defendants’ costs of and incidental to the action from 10 March 1998 taxed on the appropriate District Court scale relating to a claim of $200,000.

    (5)that the plaintiffs pay the costs of the defendants of and incidental to OS No. 10786 of 1996 taxed on the Supreme Court scale.