Keswick Developments Pty Ltd v. Keswick Island Pty Ltd & Ors

[2009] QSC 59

SUPREME COURT OF QUEENSLAND

CITATION:

Keswick Developments Pty Ltd v Keswick Island Pty Ltd and Ors [2009] QSC 59

PARTIES:

KESWICK DEVELOPMENTS PTY LTD

Applicant

V

KESWICK ISLAND PTY LTD ACN 009 998 841

First Respondent

AND OTHERS

FILE NO/S:

Mackay Registry No. 20 of 2009

DIVISION:

Trial Division

PROCEEDING:

Hearing

ORIGINATING COURT:

Supreme Court Mackay

DELIVERED ON:

25 March 2009

DELIVERED AT:

Mackay

HEARING DATE:

16 February 2009

JUDGE:

McMeekin J

ORDER:

The respondents pay the applicant’s costs in relation to the application, including the applicant’s costs of Brisbane counsel, on the indemnity basis.

CATCHWORDS:

PROCEDURE – COSTS – DEPARTING FROM THE GENERAL RULE – ORDER FOR COSTS ON INDEMNITY BASIS

Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225

Quinn Villages Pty Ltd v Mulherin [2006] QCA 500

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397

Di Carlo v Dubois [2002] QCA 225

Rosniak v Government Insurance Office (1997) 41 NSWLR 608

COUNSEL:

Mr C.C. Wilson for the applicant

No appearance for the respondent

SOLICITORS:

Kelly Legal Solicitors for the applicant

No appearance for the respondent

1. On 16 February 2009 an Application came before me effectively for decrees that the various respondents perform their obligations under contracts that they had entered into with the applicant.  I made the Orders that the applicant sought which, by the time of the hearing, were largely uncontested.  I reserved the question of costs and directed that the parties file and serve submissions by 4.00pm on 24 February 2009.  The applicant has filed its submissions seeking an order for costs and on the indemnity basis.  The respondents have not filed submissions.

1. In a letter tendered to the Court on the day of the hearing, the respondents’ solicitors conceded that an order for costs should be made but on the standard basis.  No argument was advanced as to why that would be appropriate. 

1. It is well recognised that an order for costs on the indemnity basis will not be made unless there are special or unusual circumstances.[1]  In Di Carlo v Dubois[2] the Court of Appeal cautioned that an award of costs on an indemnity basis should not be seen as “too readily available when a particular party against whom the order is sought is seen to carry a responsibility for the state of affairs calling for a costs order without some further facts analogous to those mentioned in Colgate and other considered decisions.”[3] 

   [1]For example, see Quinn Villages Pty Ltd v Mulherin [2006] QCA 500; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.

   [2][2002] QCA 225.

   [3]At paragraph [40] per White J.

1. The reference to Colgate is a reference to the well-known decision of Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd.[4]  Sheppard J instanced several examples of cases in which indemnity costs have been ordered.  They included misconduct that caused loss of time to the Court and other parties, continuing proceedings for some ulterior motive or in wilful disregard of known facts or clearly established law, and an imprudent refusal of an offer to compromise.

   [4](1993) 46 FCR 225.

1. In Rosniak v Government Insurance Office[5] Mason P (with whom Clarke A-JA agreed) said that there must be some evidence of “unreasonable conduct” for the making of an award of indemnity costs. 

   [5](1997) 41 NSWLR 608 at 616.

1. Here the applicant points to the following factors as justifying such an order:

(a)        On five occasions between 15 July 2008 and 22 January 2009 the applicant by its solicitors requested that the respondents take the action which they were eventually ordered to take by decrees made in this application.  There was in fact no response at all to any of those entreaties;

(b)        The respondents “completely capitulated” at 10:09 am on the morning of the hearing;

(c)        The respondents filed no material and offered no explanation for the delay in responding to the numerous requests made of them, nor offered any explanation as to why they had caused the applicant to incur such expense;

(d)        The dilatory conduct of the respondents involved wasting the Court’s time and the applicant’s money on “thoroughly unjustified grounds”;

(e)        Those various facts supported a strong inference that the respondent’s approach was adopted for some ulterior or collateral motive;[6]

(f)         Prior to bringing the application the applicant gave the respondents due and timely warning that an indemnity costs order would be sought.[7]

[6]Citing Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401 per Woodward J.: The actions “must be presumed to have been commenced or continued for some ulterior motive” (emphasis added).

[7]Citing Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 249, 250 per Kirby P.

1. The applicant also contends that, independently of any discretion that the Court might have, indemnity costs were justified on the ground that the costs agreement contained in certain of the deeds executed by the parties, and forming the basis of the respondents’ liability for the orders made in the application, afforded a basis for fixing costs on an indemnity basis. 

1. In my view the submissions of the applicant are well made.  I rest my decision on the discretion that I have as to costs.

1. It is difficult to avoid a finding that there must have been some ulterior or collateral motive involved in the refusal to respond to the applicant’s correspondence over some seven months.  It may simply be that the respondents found some advantage in delay before being forced to meet their contractual obligations.  There is at least evidence of unreasonable conduct, wholly unexplained, which justifies an order that the costs be on an indemnity basis.

1. A further issue raised in the letter tendered by the applicant but emanating from the respondents’ solicitors was that the applicant’s costs not include Brisbane counsel.  The order that the costs be on an indemnity basis would of course mean that the costs of the Brisbane counsel will be met.  I take this opportunity however to record my view that in the normal case, where there are counsel in practice in the area and able to appear, it would not be appropriate that a losing party be saddled with the additional costs involved in having counsel travel up from Brisbane to a regional centre. 

1. Every case of course must be judged on its own merits.  In this case, the parties have had extensive contractual dealings, the dispute between them is the subject of litigation in at least three proceedings in Brisbane and Mr Charles Wilson, the counsel who appeared on behalf of the applicant, has been involved in all those matters.  There was good reason that he be briefed in this matter, he having already a detailed knowledge of the contractual documents and of the background to the disputes between the parties. 

1. I order that the respondents pay the applicant’s costs in relation to the application, including the applicant’s costs of Brisbane counsel, on the indemnity basis.