Litfin v Wenck (No 2)

Case [2024] QSC 220

SUPREME COURT OF QUEENSLAND

CITATION:

Litfin v Wenck (No 2) [2024] QSC 220

PARTIES:

CAROLYN JANE LITFIN

(applicant)

v
CAMERON DAVID WENCK

(respondent)

FILE NO/S:

BS No 4728 of 2022

DIVISION:

Trial Division

PROCEEDING:

Originating Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

18 September 2024

DELIVERED AT:

Brisbane

HEARING DATES:

On the papers

JUDGE:

Williams J

ORDERS:

1.   That the Applicant pay the Respondent’s costs of and incidental to the Originating Application (including any reserved costs) on the standard basis from commencement of the Originating Application until 22 January 2024, to be agreed or assessed.

2.   That the assessment of the Respondent’s costs on a standard basis be made on the basis that, except so far as they are of unreasonable amount, the fees of senior counsel and junior counsel should be regarded as costs necessary and proper.

3.   That the Applicant pay the Respondent’s costs of and incidental to the Originating Application (including any reserved costs) on the indemnity basis on and from 23 January 2024, to be agreed or assessed.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDING – COSTS – OFFERS TO COMPROMISE – CALDERBANK OFFER – where the applicant was unsuccessful in its application – where the respondent now seek costs of and incidental to the application, including any reserved costs, up to the  expiry of a Calderbank offer on the standard basis – where the respondent further seeks costs of and incidental to the application, including any reserved costs, after the date of expiry of a Calderbank offer on the indemnity basis – where the applicant contends to pay the respondents costs of and incidental to the originating application, including any reserved costs, on the standard basis – where there was a Calderbank offer sent by the respondent – whether the rejection of the offer was unreasonable – whether the respondent is entitled to costs on the indemnity basis

Property Law Act 1974 (Qld), s 181
Uniform Civil Procedure Rules 1999 (Qld), r 307, r 681, r 702, r 703

Alpine Pty Ltd v Brisbane City Council [2024] QSC 93
Barboza v Blundy & others [2021] QSC 82
Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd (No 4) [2009] FCA 803
Calderbank v Calderbank [1976] 3 All ER 333
Clark v Commissioner of Taxation (2010) FCR 102
Hobbs v Oildrive Pty Ltd (No 2) [2008] QSC 52
Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358
Litfin v Wenck [2024] QSC 170
McGee v Independent Assessor & Anor [No 2] [2024] QCA 7
Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344
Rakman International Pty Ltd v Boss Fire & Safety Pty Ltd [2023] FACAFC 202
Seven Network News Ltd v News Ltd (2007) 244 ALR 374
SHA Premier Constructions Pty Ltd v Niclin Construction Pty Ltd (No 2) [2020] QSC 323
Teo & Anor v Twyford bht Cunningham (No 2) [2023] NSWSC 1626

COUNSEL:

L Copley for the applicant

M D Ambrose KC with K…

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AGLC
Litfin v Wenck (No 2) [2024] QSC 220
Case
[2024] QSC 220
Decision Date

CaseChat Overview and Summary

In the case of Litfin v Wenck (No 2), the Respondent sought costs of and incidental to the Originating Application, including any reserved costs, from the Applicant. This followed a previous court decision where the Applicant's application was dismissed and reasons were published. The Respondent requested three specific orders regarding the costs, including costs on a standard basis from the commencement of the application until a certain date, and costs on an indemnity basis from a later date. The Applicant argued that the costs should be paid on a standard basis only.

The legal issues revolved around the appropriate basis for awarding costs, particularly whether the rejection of the Respondent's offer to compromise was unreasonable, thereby justifying an order for indemnity costs. The Respondent's offer, made under the principles of Calderbank v Calderbank, was open for four weeks and foreshadowed that indemnity costs would be sought if not accepted. The Respondent cited relevant legal principles, including the discretion of the court to order indemnity costs when there is an unreasonable rejection of a Calderbank offer.

The court considered the Respondent's success in the proceedings and the discretion to award costs on an indemnity basis. The court noted that the unreasonable refusal of a Calderbank offer can justify an order for indemnity costs. The onus was on the Respondent to establish that the rejection was unreasonable, considering the strengths and weaknesses of the Applicant's case at the time of the offer. The court concluded that the rejection was unreasonable given the Applicant's ultimate failure in the proceedings.

The court made the following orders: (1) the Applicant must pay the Respondent's costs of and incidental to the Originating Application on a standard basis from the commencement until a specified date; (2) the assessment of these costs must be made on a standard basis, with certain fees regarded as necessary and proper; and (3) the Applicant must pay the Respondent's costs of and incidental to the Originating Application on an indemnity basis from a later date.

Orders

Orders of the court

1. That the Applicant pay the Respondent’s costs of and incidental to the Originating Application (including any reserved costs) on the standard basis from commencement of the Originating Application until 22 January 2024, to be agreed or assessed.

2. That the assessment of the Respondent’s costs on a standard basis be made on the basis that, except so far as they are of unreasonable amount, the fees of senior counsel and junior counsel should be regarded as costs necessary and proper.

3. That the Applicant pay the Respondent’s costs of and incidental to the Originating Application (including any reserved costs) on the indemnity basis on and from 23 January 2024, to be agreed or assessed.

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

On 9 August 2024 an order was made that the originating application be dismissed and reasons were published (Judgment).[1] Further, directions were made for the parties to file submissions in relation to costs and it was agreed that costs be dealt with on the papers.[1]Litfin v Wenck [2024] QSC 170. The defined terms in the Judgment are used in these reasons, unless stated to the contrary. The Respondent seeks three orders in respect of costs:(a)That the Applicant pay the Respondent’s costs of and incidental to the Originating Application (including any reserved costs) on the standard basis from commencement of the Originating Application until 22 January 2024, to be agreed or assessed.(b)That the assessment of the Respondent’s costs on a standard basis be made on the basis that, except so far as they are of unreasonable amount, the fees of senior counsel and junior counsel should be regarded as costs necessary and proper.(c)That the Applicant pay the Respondent’s costs of and incidental to the Originating Application (including any reserved costs) on the indemnity basis on and from 23 January 2024, to be agreed or assessed. The Applicant contends that the appropriate order in relation to costs is that the Applicant pay the Respondent’s costs of and incidental to the Originating Application (including any reserved costs) on the standard basis. In light of the divergence in the orders sought, it is necessary to consider the relevant legal principles as well as the specific factual circumstances relied upon in respect to costs.Respondent’s position The Respondent seeks costs pursuant to r 681 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR), which are in the discretion of the court and follow the event unless the court orders otherwise. Pursuant to r 702 UCPR costs are to be assessed on the standard basis unless the UCPR or an order of the court provides otherwise. The Respondent submits that costs should be paid on and from 23 January 2024 on the indemnity basis pursuant to r 703(1) UCPR by reason of the Respondent having offered to resolve the proceedings on the basis set out in a letter dated 22 December 2023 (Respondent’s Offer), which was not accepted by the Respondent.[2][2]A copy of the Respondent’s Offer is exhibited to the affidavit of Mr Boyle sworn 13 August 2024 at exhibit JAB-3. The Respondent’s Offer was:(a)Made pursuant to the principles identified in Calderbank v Calderbank.[3](b)That the proceeding be dismissed by consent, with each party to bear their own costs. (c)The offer was open for four weeks. (d)Foreshadowed that indemnity costs would be sought if the offer was not accepted.[3][1976] 3 All ER 333. The Respondent outlines the relevant principles in respect of an application for indemnity costs arising from the operation of a Calderbank offer. In particular, the Respondent relies on the summary of the principles in the reasons of Cooper J in the Queensland Court of Appeal in McGee v Independent Assessor & Anor [No 2].[4][4][2024] QCA 7 at [21]-[26], with whom Dalton JA agreed and which Bond JA identified as correct at paras [5] and [2] respectively.

Ratio Decidendi

Legal Principle Established

Accordingly, it is submitted that the Court should make the orders proposed by the Respondent.Consideration The starting point is that the Respondent was wholly successful at the trial and the Applicant should be ordered to pay the Respondent’s costs of and incidental to the application on a standard basis, unless another order is appropriate. The Court has the discretion to order indemnity costs and the authorities recognise that the unreasonable refusal of a Calderbank offer may be a proper basis for the exercise of the Court’s discretion. The relevant principles have been helpfully summarised by Cooper J in McGee v Independent Assessor & Anor[56]and which have been outlined previously in these reasons. The principles are not contentious between the parties.[56][2024] QCA 7 at [21]-[26], with whom Dalton JA agreed and which Bond JA identified as correct at paras [5] and [2] respectively. The Respondent’s Offer complied with the technical requirements to be a valid Calderbank offer. The relevant issue is whether it was unreasonable for the Applicant to reject the Respondent’s Offer. This is to be considered at the time the offer was made. The onus generally lies on the party seeking an order for indemnity costs to establish the entitlement to an award of indemnity costs based on the unreasonable rejection of an offer to compromise.[57][57]Seven Network Ltd and Anor v News Ltd and Ors [2007] 244 ALR 374 at [59] – [63]; Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [26]; Evans v Braddock (No 2) [2015] NSWSC 518 at [49]; Southwell v Staite (No 2) [2019] ACTSC 83 at [15]. Ultimately the award of indemnity costs involves the exercise of a discretion. There is no rule that a Calderbank offer that is a discontinuance or a dismissal of the proceeding with each party bearing their own costs cannot be the basis upon which the Court exercises its discretion to award indemnity costs. The proper exercise of the discretion is in all of the circumstances in a particular case. In considering whether the Applicant acted unreasonably in rejecting the Respondent’s Offer, consideration is to be given to the strengths and weaknesses of the Applicant’s case prospectively at the time the offer was made. It is, however, relevant that the Applicant ultimately failed.[58][58]Seven Network Ltd v News Ltd (2007) 244 ALR 374, per Sackville J at [65] and [66]. Bond J in SHA Premier Constructions Pty Ltd v Niclin Construction Pty Ltd (No 2)[59] recognised that there are two competing policy considerations; encouraging settlement and not discouraging litigants from bringing their disputes to the courts.[60][59][2020] QSC 323.[60]At [13]. See Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at [21] – [23] and J&D Rigging Pty Ltd v Agripower Australia Limited [2014] QCA 23 at [5]. His Honour recognised that the policy rationale for awarding costs on an indemnity basis after the unreasonable rejection of an offer is that:“from the time of the unreasonable rejection, notionally the real cause and occasion of the litigation is the unreasonable attitude adopted by the offeree”.[61][61]At [13]. Also see Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at [21].