Johnston v Herrod - [2012] QSC 107

SUPREME COURT OF QUEENSLAND

CITATION:

Johnston & Anor v Herrod & Ors [2012] QSC 107

PARTIES:

HARELLA CAROLINE JOHNSTON
(first plaintiff)
LEAH DELILAH FELSMAN
(second plaintiff)
v
HAREL JOSEPH HERROD
(first defendant)
ROBERT MATTHEW HERROD
(second defendant)
RACHEL REBECCA HOLLINGSWORTH
(third defendant)

FILE NO/S:

No 501 of 2007

DIVISION:

Trial Division

PROCEEDING:

Trial – Further Orders

ORIGINATING COURT:

Supreme Court, Townsville

DELIVERED ON:

26 April 2012

DELIVERED AT:

Brisbane

HEARING:

Heard on the papers

JUDGE:

Chief Justice

ORDER:

Order that the defendants pay the plaintiffs’ costs of and incidental to the proceeding to be assessed on the standard basis

CATCHWORDS:

PROCEDURE – COSTS – GENERAL RULE - COSTS FOLLOW THE EVENT – COSTS OF WHOLE ACTION – GENERALLY – where plaintiffs succeeded at trial – where some offers to settle were made – where defendants’ conduct claimed to be such that costs should be awarded on the indemnity basis – whether costs should be assessed on the indemnity basis

Barrett Property Group Ltd v Metricon Homes Pty Ltd (No 2) (2007) FCA 1823, cited

COUNSEL:

No appearance by the plaintiffs, the plaintiffs’ submissions were heard on the papers
No appearance by the defendants, the defendants’ submissions were heard on the papers

SOLICITORS:

de Groots for the plaintiffs
Wilson Ryan & Grose for the defendants

CHIEF JUSTICE: It is common ground that the defendants should be ordered to pay the plaintiffs’ costs, with the issue being whether they should fall for assessment on the indemnity basis, for which the plaintiffs contend, or on the standard basis, for which the defendants contend.

A number of offers to settle passed between the parties. On 31 August 2006, the plaintiffs offered to accept $600,000 each, inclusive of costs, in satisfaction of the family provision application “and also any other actions they may have” against the defendants. Whether the plaintiffs have done better than that cannot be determined reliably, because the family provision application remains undetermined.

On 20 February 2012, the day before the trial commenced, the plaintiffs offered to accept $420,000 each, together with indemnity costs. The offer was expressed to remain open until noon on 21 February. It was not accepted. While that offer was not made under Part 5 of Chapter 9 of the Uniform Civil Procedure Rules, it remains relevant to the exercise of the present discretion. While each plaintiff has secured a prospective judgment for a larger amount, being $433,709.67, that offer required the payment of indemnity costs.

The defendants’ offers were made under the Uniform Civil Procedure Rules, but for substantially lesser amounts: on 3 January 2007, $114,000 plus standard costs, and on 1 February 2012, $100,000 plus standard costs.

I do not consider that the history of offers should be influential in the exercise of the current discretion.

The plaintiffs additionally rely on the findings made in relation to the defendants’ conduct – especially the finding of fraud, and their breach of fiduciary duties whether owed as partners or trustees (cf. Barrett Property Group Ltd v Metricon Homes…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Johnston v Herrod

Details

AGLC: Johnston v Herrod [2012] QSC 107
Case: [2012] QSC 107
Decision Date: 26 April 2012

CaseChat Overview and Summary

The plaintiffs, Johnston, sought damages from the defendants, Herrod, in the Supreme Court of New South Wales. The claim arose from an alleged breach of contract, where Johnston claimed Herrod failed to honour an agreement to purchase Johnston's business. The trial resulted in a judgment in favour of the plaintiffs, and the defendants appealed the decision. The appeal was dismissed, and the matter proceeded to a costs hearing. The defendants argued that the plaintiffs' conduct during the proceedings warranted costs on an indemnity basis. The plaintiffs, on the other hand, argued for costs on the standard basis.

The legal issue before the court was whether the defendants' conduct warranted costs on an indemnity basis or if the general rule that costs follow the event should apply. The court considered the defendants' conduct, including their failure to make a genuine offer to settle the matter, and the plaintiffs' overall success at trial. The court determined that the defendants' conduct was not egregious enough to warrant indemnity costs and that the general rule should apply.

The court held that the defendants' conduct did not warrant indemnity costs, and therefore, the costs should be assessed on the standard basis. The court found that the plaintiffs' success at trial and the defendants' failure to make a genuine offer to settle were not sufficient grounds to deviate from the general rule. The court noted that while the defendants' conduct was not ideal, it did not reach the level of egregiousness required for indemnity costs. The court's decision was based on a careful consideration of the defendants' conduct and the principles of costs in Australian law.

The final order of the court was that the defendants pay the plaintiffs' costs of and incidental to the proceeding to be assessed on the standard basis. The court acknowledged the plaintiffs' success at trial and the defendants' failure to make a genuine offer to settle, but determined that these factors were not sufficient to warrant indemnity costs. The court's decision was based on a thorough analysis of the legal principles and the facts of the case.

Orders

Orders of the court

Order that the defendants pay the plaintiffs’ costs of and incidental to the proceeding to be assessed on the standard basis

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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CITATION:	Johnston & Anor v Herrod & Ors [2012] QSC 107
PARTIES:	HARELLA CAROLINE JOHNSTON (first plaintiff) LEAH DELILAH FELSMAN (second plaintiff) v HAREL JOSEPH HERROD (first defendant) ROBERT MATTHEW HERROD (second defendant) RACHEL REBECCA HOLLINGSWORTH (third defendant)
FILE NO/S:	No 501 of 2007
DIVISION:	Trial Division
PROCEEDING:	Trial – Further Orders
ORIGINATING COURT:	Supreme Court, Townsville
DELIVERED ON:	26 April 2012
DELIVERED AT:	Brisbane
HEARING:	Heard on the papers
JUDGE:	Chief Justice
ORDER:	Order that the defendants pay the plaintiffs’ costs of and incidental to the proceeding to be assessed on the standard basis
CATCHWORDS:	PROCEDURE – COSTS – GENERAL RULE - COSTS FOLLOW THE EVENT – COSTS OF WHOLE ACTION – GENERALLY – where plaintiffs succeeded at trial – where some offers to settle were made – where defendants’ conduct claimed to be such that costs should be awarded on the indemnity basis – whether costs should be assessed on the indemnity basis Barrett Property Group Ltd v Metricon Homes Pty Ltd (No 2) (2007) FCA 1823, cited
COUNSEL:	No appearance by the plaintiffs, the plaintiffs’ submissions were heard on the papers No appearance by the defendants, the defendants’ submissions were heard on the papers
SOLICITORS:	de Groots for the plaintiffs Wilson Ryan & Grose for the defendants