John Goss Projects Pl v Thiess Watkins White Constructions Limited
[1995] QSC 79
•11 May 1995
IN THE SUPREME COURT
OF QUEENSLAND
No. 1168 of 1990
Brisbane
Before the Hon. Justice G N Williams
[John Goss Projects Pl v. Thiess Watkins White Constructions Limited & Anor]
BETWEEN:
JOHN GOSS PROJECTS PTY LTD
(Plaintiff)
AND:
THIESS WATKINS WHITE CONSTRUCTIONS LIMITED
(In Liquidation)(First Defendant)
AND:
GUNDADIN PTY LTD
(Second Defendant)
JUDGMENT - G N WILLIAMS J
Judgment delivered 11/05/1995
CATCHWORDS COSTS - taxation - O. 91 r. 89 - offer to settle - offer based on offsetting of other identifiable bills - offer held not to be vague and uncertain - O. 91 rr. 77A and 73 considered
Counsel:R J Douglas for the applicant
D Castley (solicitor) for the respondent
Solicitors:Bowdens for the applicant
Flower and Hart for the respondent
Hearing date: 26 May 1995
IN THE SUPREME COURT
OF QUEENSLAND
No. 1168 of 1990
BETWEEN:
JOHN GOSS PROJECTS PTY LTD
(Plaintiff)
AND:
THIESS WATKINS WHITE CONSTRUCTIONS LIMITED
(In Liquidation)(First Defendant)
AND:
GUNDADIN PTY LTD
(Second Defendant)
JUDGMENT - G N WILLIAMS J
Judgment delivered 11/05/1995
This is an application on the part of the plaintiff in the action, John Goss Projects Pty Ltd, for a review of a taxation of costs between the applicant and the respondent, the second defendant in the action Gundadin Pty Ltd.
The action was commenced on 30 July 1990 and was principally brought to enforce a subcontractor's charge. There was a counter‑claim by the respondent, who was the contractor. Ultimately on 3 September 1992 de Jersey J dismissed both the claim and counter‑claim and consequentially ordered:
that the applicant pay the respondent's costs of the claim to be taxed; and
that the respondent pay the applicant's taxed costs of the counter‑claim.
During the course of the proceedings prior to trial, a number of costs orders were made after hearing interlocutory applications.
As at 1 November 1993 the applicant had delivered eight Bills of Costs for taxation; particulars are set later. It should be noted that each of the Bills was filed on the same date, 29 July 1993.
I should also mention that there was another Bill of Costs which was filed by the applicant on 17 November 1993. It was related to an order of the Court of Appeal dated 23 September 1992. As it was filed after 1 November 1993, for reasons which will hereafter appear, it is irrelevant for present purposes.
The respondent as at 1 November 1993 had filed four Bills of Costs for taxation; again particulars are set out later. It should be noted that all of the respondent's Bills were filed on the same date, namely 2 July 1993.
Taxation of the Bills filed 2 July and 29 July commenced on 15 September 1993. The material does not make clear the extent to which that had proceeded prior to 1 November 1993; it does suggest taxation of some of the interlocutory Bills had been completed. Importantly the taxation of the respondent's Bill relating to the order of de Jersey J of 3 September 1992 had not commenced by 1 November 1993.
Order 91 r. 89 is in the following terms:"(1)A person liable to pay costs may serve an offer to settle on the party entitled to the costs.
(2)An offer to settle -
(a)must -
(i)be in writing; and
(ii)include a statement that it is made under this rule; and
(iii)be made in respect of the whole of that person's liability for costs; and
(b)may be served -
. . .
(ii)in any other case - at any time after the judgment or order for costs is made.
(3)An offer to settle -
(a)cannot be withdrawn without the leave of the Court or a Judge; and
(b)does not lapse because of rejection or failure to be accepted; and
(c)expires at the start of the taxation of the Bill of Costs to which the offer relates.
(4)Except for the purpose of subrule (6) the making of an offer to settle must not be disclosed to the Taxing Officer until the costs of taxation are to be determined.
(5)The acceptance of an offer to settle must be in writing.
(6)On being satisfied that the offer to settle has been accepted, the Taxing Officer must certify the costs have been fixed at the amount of the offer."
The significance of making such an offer is demonstrated by O. 91 r. 77A(3) which is in these terms:
"If an offer to settle under rule 89 is made and is not accepted -
(a)if the amount allowed by the Taxing Officer before determination of the costs of taxation is equal to, or more than, the amount of the offer - the party liable for the costs must pay the costs of taxation; or
(b)if the amount allowed by the Taxing Officer before determination of the costs of taxation is less than the amount of the offer - the party entitled to the costs must pay the costs of taxation;
unless the Taxing Officer is satisfied that another order is proper in the circumstances."
By letter dated 1 November 1993 the applicant made an offer to settle the costs of the respondent's Bill relating to the order of de Jersey J of 3 September 1992; the letter was in these terms:
"Pursuant to Order 91 Rule 89 of the Rules of the Supreme Court the Plaintiff, John Goss Projects Pty Ltd offers to settle in full and final satisfaction of the costs pursuant to the Second Defendant's Bill of Costs delivered pursuant to the Order of his Honour Mr Justice de Jersey made the Third day of September 1992 on the following basis -
(1)The Plaintiff pay the Second Defendant $100,000;
(2)The Second Defendant release the Plaintiff from any liability to pay costs pursuant to any other Bills of Costs and Certificates of Taxation delivered by the Second Defendant to the Plaintiff in respect of this action; and
(3)The Plaintiff release the Second Defendant from any liability with respect to any and all Bills of Costs and Certificates of Taxation delivered by the Plaintiff to the Second Defendant in respect of this action."
The offer was not accepted by the respondent and the Bill therein referred to proceeded to taxation. On 25 November 1994 the Taxing Officer issued his Certificate of Taxation. That Certificate is in these terms:
"I certify that I have taxed the second defendant's costs against the plaintiff pursuant to judgment dated the third day of September 1992 and allowed the same on an interim basis at $103,835.27.
I further certify that pursuant to Order 91 Rule 73 the following costs have been offsetted against the above interim costs:-
The plaintiff's costs against the second defendant pursuant to the order of the Court of Appeal made the 23rd September 1992 in Appeal No. 107 of 1992;
The plaintiff's costs against the second defendant pursuant to order of Master Horton made the 26th July 1991;
The plaintiff's costs against the second defendant pursuant to order of Master White made the 22nd November 1991;
iv)The plaintiff's costs against the second defendant pursuant to order of Mr Justice Shepherdson made the 13th May 1992;
The plaintiff's costs against the second defendant pursuant to order of Master White made the 18th February 1992;
The plaintiff's costs against the second defendant pursuant to order of Master White made the 9th October 1991;
The plaintiff's costs against the second defendant pursuant to order of Master White made the 31st July 1991;
viii)The plaintiff's costs against the second defendant pursuant to judgement dated the 3rd September 1992;
and
The plaintiff's costs against the second defendant pursuant to order of Master White made the 23rd October 1991."
It will be seen that the set‑off was with respect to each of the eight Bills delivered by the applicant on 29 July 1993 plus the taxed costs of the Bill delivered by the applicant pursuant the order of the Court of Appeal of 23 September 1992.
The applicant then submitted to the Taxing Officer pursuant to O. 89 r. 77A that the respondent should pay the costs of the taxation of the respondent's Bill relating to the judgment dated 3 September 1992 on the basis that the taxation was less favourable to the respondent than the terms of the applicant's offer referred to above. The Taxing Officer rejected the submissions of the applicant and allowed the respondent $10,786.50 as costs of the taxation.
The applicant duly delivered a Notice of Objection in relation to that ruling of the Taxing Officer. The respondent delivered a response to that objection and, for reasons which he published, the Taxing Officer refused to uphold the applicant's objection. The reasons of the Taxing Officer are as follows:"On 23 February 1995 I received objections in relation to the above Bill of Costs.
The objections relate to my allowing the Second Defendant the Costs of Taxation notwithstanding that the offer was made by the Plaintiff's Solicitors by letter dated 1 November 1993.
It warrants repeating the exact words of the offer namely:
(Here the Taxing Officer set out the full text of the offer)
I note the submissions made in letters by the Plaintiff's Solicitors and the Second Defendant's Solicitors.
Order 91 Rule 89 allows the Plaintiff to lodge an offer in relation to a Bill of Costs. Order 91 Rule 77A provides as to who must pay 'the costs of taxation' depending upon whether the amount allowed by the Taxing Officer is equal to, or more than, the amount of the offer.
On reconsideration of this matter, I do not consider that one has to specifically make a cash offer. The words 'amount of the offer' in Order 91 R.77A(3)(a) and (b) to me mean the full value of the offer.
When one looks at the full amount of the offer one can argue that the interpretation is that the value of the offer is $100,000 less $76,206.06 (i.e the total value of the Bills taxed in favour of the plaintiff which the Second Defendant will not be required to pay) and less $5,970.41 (that is the total value of Bills in favour of the Second Defendant which the Second Defendant will waive excluding this Bill the subject of the objections).
Therefore the value of the offer is:-
$100,000 - $76,206.06 - $5,970.41 = $17,823.53
However, on reconsideration of this matter, I must accept the arguments of the Second Defendant's Solicitors that the offer is vague. I consider that the offer is vague and should have specifically spelt out the value of the offer.
Accordingly the objections are dismissed. I allow the Second Defendant the sum of $150 of and incidental to the objections."
Particulars of the bills in question are as follows:
The nine Bills filed by the applicant were allowed on taxation in the total sum of $76,206.06; one sees that amount referred to by the Taxing Officer in his reasons. If one subtracts the Court of Appeal costs (item (ix)) the applicant's eight remaining Bills were allowed on taxation in the total sum of $72,060.88. Those relevant eight Bills were delivered in the total sum of $85,669.13.
The four Bills filed by the respondent taxed out in the total amount of $119,289.34 without the amount of $10,786.50 allowed as costs of taxation of the Bill taxed pursuant to the order of de Jersey J of 3 September 1992.
The three Bills filed by the respondent, other than that relating to the order of de Jersey J of 3 September 1992, were delivered in the total sum of $17,233.57 and on taxation the total amount of $15,454.07 was allowed. The figure of $5,970.41 referred to by the Taxing Officer in his reasons, is the total of the amounts allowed on taxation of the Bills being items (x) and (xi) in the schedule above.
There is no doubt that by the letter of 1 November 1993 the applicant made an offer in writing specifically stating that it was made pursuant to O. 91 r. 89. It was also served in accordance with the provisions of the rule. There can also be no doubt that in order to comply with the requirements of that rule the offer must be certain and not vague; it must be clear as to the benefit the party receiving the offer is to obtain if it is accepted. Whilst there are no specific authorities to that effect on O. 91 r. 89 there are such authorities dealing with offers to settle pursuant to O. 26 generally (see, for example, Duncan & Weller Pty Ltd v. Mendelson [1989] V.R. 386 and Whitehouse Properties Pty Ltd v. Bond Brewing (NSW) Ltd (1992) 28 N.S.W.L.R. 17).
The submissions by the respondent, both to the Taxing Officer and in this court, essentially came down to two propositions:(a)the offer was vague and uncertain particularly because of its reference to the other bills; and
(b)the offer was not "made in respect of the whole of that person's liability for costs" because of the stage reached in the taxation of the bills referred to in the above schedule.
Where a number of bills have been delivered in the one action then, in my view, O. 91 r. 89 may apply to each of those bills. The party making the offer may make a separate offer to settle each bill; or it may, provided the position is made clear, make one offer to settle a number of specifically identified bills delivered in the action. In the light of the provisions of O. 91 r. 73 (which were invoked by the Taxing Officer here) it would be unrealistic if a party could not make an offer framed so that it took into account the practical result of there being a number of bills delivered for taxation which could be off‑setted.
In my view O. 91 r. 89 can apply to one bill, properly identified, in a series of bills lodged for taxation in the one action so that the offer is made with respect to the liability pursuant to that identified bill but takes into account the other bills in that action already delivered. That is the case here. The bill with respect to which the offer here was made was that delivered by the respondent pursuant to the order of de Jersey J of 3 September 1992. The offer took into account the potential liability of the parties under the other bills delivered on 29 July and 2 July 1993. But nevertheless the offer was in respect of the "whole" of the applicant's liability for costs pursuant to the bill delivered by the respondent consequent upon the order of de Jersey J of 3 September 1992.
I therefore reject the second of the respondent's submissions.
The more contentious submission is that which was accepted by the Taxing Officer, namely that the offer was ineffectual because it was vague.
As at 1 November 1993 the respondent was fully appraised of all the bills which had been delivered by either side, namely all the bills in the above schedule other than that which is item (ix). The respondent was aware as at 1 November 1993 of the amounts each of the bills in question was delivered at, and may well have been aware by that date of the amount that had been allowed on taxation of some of the bills.
What then did the offer amount to. In my view it clearly meant that the applicant would forego enforcement of payment by the respondent of the amount claimed or allowed on taxation of the bills being items (i) to (viii) in the schedule, on condition that the respondent did not enforce payment of the amount claimed or allowed on taxation of the bills being items (x) to (xii) against the applicant, and on further condition that the respondent accepted $100,000 for the costs of its bill relating to the order of de Jersey J on 3 September 1992. In other words the respondent could walk away from the taxation of all the bills in the schedule, other than item (ix), with $100,000 cash from the applicant, no liability to pay anything to the applicant, and no right to recover under those other bills. I cannot conclude that there is anything vague about such an offer.
The Taxing Officer appears to have considered the offer vague because it did not specifically spell out the value of the offer. I do not understand what was meant by that. The value of the offer was clearly calculable. Further, pursuant to O. 91 r. 89(6) the Taxing Officer could have certified as to the position if the offer had been accepted. He would have issued a certificate in much the same format as he in fact did; it would have specified that the amount of the costs with respect to the bill being taxed (item (xiii) in the schedule above) at $100,000 and referred to the offsetting of all the other bills in the schedule (save item (ix)) pursuant to O. 91 r. 73.
The next question is whether or not the offer was "more than" the amount allowed on taxation; that means in real terms was the offer more favourable to the respondent than the result of the taxation evidenced by the certificate issued 25 November 1994. For some reason the Taxing Officer clearly erred in arriving at the figure of $17,823.53 in his reasons. The true position would appear to be as follows.
If one uses the figures at which the applicant's bills (items (i) to (viii)) were delivered and the figures at which the respondent's bills (items (x) to (xii)) were delivered the position would be as follows: the respondent would receive $100,000 cash, be deprived of recovering the $17,233.57, and be released from paying $85,669.13. The total net benefit to the respondent in consequence would be $168,435.56.
If one uses the amounts ultimately allowed on taxation the position would be as follows: the respondent would receive $100,000 cash, be deprived of recovering $15,454.07, and be released from paying $72,060.88. The total net benefit to the respondent in consequence would be $156,606.81.
Given the balance in favour of the respondent in off‑setting items (i) to (viii) against items (x) to (xii) whatever figures were used, it must have been obvious to the respondent that the overall benefit to it was much greater than the $100,000 cash offered.
That is to be contrasted with the position pursuant to the certificate issued by the Taxing Officer. For present purposes one has to disregard item (i) of the offsetting in that certificate; the costs pursuant to the Court of Appeal order of 23 September 1992 were not covered by the offer because the bill had not been delivered as at 1 November 1993. That means that from the $103,835.27 had to be deducted the sum of $72,060.88, leaving a net balance pursuant to the certificate of $31,774.39. That is well below the $100,000 cash the subject of the offer. Having rejected the offer the respondent is, of course, entitled to recover the $15,454.07, but that brings the total only up to $47,228.46, still significantly lower than the $100,000 offered.
However one looks at the figure the respondent was substantially worse off by not accepting the offer.
As, in my view, the offer was not vague, and was otherwise in accordance with O. 91 r. 89, there was no proper basis upon which the Taxing Officer could have allowed the respondent the costs of the taxation of the bill being item (xiii) in the schedule above. The costs of that taxation ought to have been allowed to the applicant.
The errors in the reasoning of the Taxing Officer to which I have referred are reviewable pursuant to the Rules and the authorities relating thereto, and in consequence this court is entitled to set aside the orders in question.
The decision of the Taxing Officer to award the respondent costs in the sum of $10,786.50 with respect to the taxation of the respondent's bill delivered pursuant to the order of de Jersey J of 3 September 1992 should be set aside. In lieu it should be ordered that the respondent pay the applicant's costs of that taxation and also the taxed costs of this review.
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