Mad Dogs Pty Ltd (in liq) v Gilligan's Backpackers Hotel and Resort Pty Ltd (No 4)

The case of Mad Dogs Pty Ltd (in liq) v Gilligan's Backpackers Hotel and Resort Pty Ltd (No 4) involved a claim by Mad Dogs Pty Ltd against Gilligan's Backpackers Hotel and Resort Pty Ltd for breach of contract. The plaintiff, Mad Dogs, sought damages for loss of profit under the terminated contract and for future renewal periods. The defendants contested the claim, and the matter proceeded to the court which had to decide on the appropriate method of calculating damages, including the rate for the present value of money, the basis for interest, and whether there should be any tax reduction. The court was also tasked with determining the appropriate costs order given the involvement of a de facto director of one of the defendants who actively participated in the dispute.

The court determined that a 30 percent rate was appropriate for calculating the present value of money. Interest was to be calculated from the time of the breach, with no specific identifiable reduction for tax. Regarding costs, the court found that the de facto director was to be treated as a party for the purposes of the costs order. It was held that the majority of the work performed by the company’s lawyers would have been required regardless of whether the de facto director was made a party to the action. Consequently, the court ruled that an order for costs other than costs following the event was appropriate. The first defendant was ordered to pay the second defendant’s costs in excess of the joint representational costs, as well as the plaintiff’s costs of the claim against the first defendant. Additionally, the defendants were ordered to pay the plaintiff’s costs of various applications and adjournments.

The court's final orders included a judgment for the plaintiff against the first defendant for $351,193.57, which comprised $201,357.44 in damages and $149,836.13 in interest. The first defendant was ordered to pay the second defendant's costs exceeding the joint representational costs, as well as the plaintiff’s costs of the claim against the first defendant. Furthermore, the defendants were ordered to pay the plaintiff’s costs of various applications and adjournments. This comprehensive costs order reflected the court's consideration of the active role played by the de facto director and the necessity of the legal work performed.