McConaghy v The Ship MV 2000 (No 3)

[2024] QSC 92

SUPREME COURT OF QUEENSLAND

CITATION:

McConaghy v The Ship MV 2000 (No 3) [2024] QSC 92

PARTIES:

LAWRENCE McCONAGHY

(First Plaintiff) and

JOANNE VERNEY
(Second Plaintiff)
v
THE SHIP MV 2000

(First Defendant) and

FORTITUDE INVESTMENTS AUSTRALIA PTY LTD (ABN 47629489149)

(Second Defendant)

FILE NO/S:

189 of 2020

DIVISION:

Trial

PROCEEDING:

Application for Costs

ORIGINATING COURT:

Supreme Court of Queensland at Cairns

DELIVERED ORALLY ON:

5 February 2024

DELIVERED AT:

Cairns

HEARING DATE:

2 February 2024

JUDGE:

Henry J

ORDERS:

1.   The defendants will pay the plaintiffs 70 per cent of the plaintiffs’ costs of the proceeding, to be assessed on the standard basis.

2.   Liberty to apply in connection with the security on the giving of two business days’ notice in writing.

CATCHWORDS:

PROCEDURES – CIVIL PROCEEDING IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW EVENT – GENERAL PRINCIPLES AND EXERCISE OF DISCRETION – where costs follow trial judgment – where the defendants allege the plaintiffs’ conduct was unreasonable – where the defendants seek the plaintiffs pay the defendants’ costs

PROCEDURES – CIVIL PROCEEDING IN STATE AND TERRITORY COURTS – COSTS – DEPRIVING SUCCESSFUL PARTY OF COSTS – CONDUCT OF PARTY OR PROCEEDING – GENERALLY – where the plaintiffs were the substantially successful party – where the defendants allege the plaintiffs were unreasonable by rejecting their Calderbank offer – where the defendants allege the plaintiffs were unreasonable in submitting unrealistic settlement offers – where the defendants allege the plaintiffs were unreasonable by signing a dispute resolution agreement but not executing the related deed – where the defendants allege the plaintiffs’ conduct in arresting the MV2000 Ship and placing the $28,000 claim before the Supreme Court was unreasonable – where the defendants allege the plaintiffs’ conduct in the course of proceedings and trial was unreasonable – whether the plaintiffs’ conduct throughout the proceeding was so unreasonable that they be ordered to pay the defendants’ costs – where the extent of any alleged unreasonableness by the plaintiffs in their conduct of litigation was no worse than that of the defendants

Alborn & Ors v Stephens & Ors [2010] QCA 58, cited
Calderbank v Calderbank [1975] 3 All ER 333, cited
Day v Humphrey [2018] QCA 321, cited
Oshlack v Richmond River Council (1998) 193 CLR 72, cited

Uniform Civil Procedure Rules rr 681, 684

COUNSEL:

J McDiarmuid (sol) for the plaintiffs

A Lawrence for the defendants

SOLICITORS:

Agnew Lawyers for the plaintiffs

Pacific Maritime Lawyers for the first and second defendants

1. I gave judgment in McConaghy & Anor v The Ship MV2000 & Anor (No 2) [2023] QSC 274 on 1 December 2023.

2. It remains to determine the question of costs, as to which the parties are poles apart.  On the one hand, the plaintiffs submit, as the predominantly successful party, that the defendants ought bear the plaintiffs’ costs.  Failing that, they submit the defendants ought pay at least a substantial proportion of the plaintiffs’ costs.  On the other hand, the defendants contend that by reason of the allegedly unreasonable conduct of the plaintiffs in advance of and during the proceeding, the plaintiffs ought pay the defendants’ costs assessed on the standard basis to 9 April 2020 and thereafter on an indemnity basis.

3. For the reasons which follow, I am persuaded there ought be some proportionate discounting of the costs order which ought favour the plaintiffs as the predominantly successful parties and am unpersuaded that the allegedly unreasonable conduct justifies an any more favourable outcome for the defendants. 

4. It is convenient to dispense with the defendants’ unreasonableness arguments at the outset.  In summary, there were five such arguments calculated at arguing the degree of unreasonableness came within the type of misconduct identified by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72, 97–98.

5. First, it was submitted the plaintiffs unreasonably rejected the defendants’ Calderbank settlement offers – see Calderbank v Calderbank [1975] 3 All ER 333. Of the purported “settlement offers” contended for at para 11 of the defendants’ submissions on costs, the closest in comparison to the ultimate monetary awards at trial was one made on 9 April 2020. That was an all-up settlement offer of $20,000 made after the arrest warrant of the vessel was issued, but before it had been served.

6. It will be recalled that, before the addition of interest, the plaintiffs were awarded $21,411.90 and the defendants were awarded $5,358.67, a net amount in the plaintiffs’ favour of $16,053.23.  While that is less than the $20,000 offered on 9 April 2020, it is to be appreciated that the offer of 9 April 2020 was an “all-up” offer, that is to say, inclusive of legal costs already incurred by the plaintiffs.  By that stage, allowing for the recoverable legal costs the plaintiffs had already incurred in combination with the aforementioned amount, the all-up total would have exceeded the $20,000 offered.  It follows the offer of 9 April 2020 did not best the outcome at trial.  No other offers to settle proceeding were any better than that of 9 April 2020. 

7. Secondly, the defendants complained of unreasonable conduct by the plaintiffs in submitting unrealistic offers of settlement.  It is true that the plaintiffs made a number of clearly unrealistic offers of settlement, effectively seeking the payment of amounts far in excess of anything they could conceivably have been entitled to.  But on the other hand, the defendants also made settlement offers which were, in light of the ultimate outcome in the case, unrealistic as well.  No authority has been cited in support of it being appropriate for a Judge deciding costs to delve into an assessment of the degree of how unrealistic or fantastic the unsuccessful settlement offers of rival litigants were.  Such an exercise would encourage further factual dispute at odds with the intended finality of judgment.  Further, such offers are prima facie irrelevant to the Court’s decision, unless they bested the eventual outcome.  None did here.

8. Thirdly, the defendants complained of unreasonable conduct by the plaintiffs in allegedly signing an agreement at mediation to resolve the dispute completely, but not executing the deed in contemplation of the heads of that agreement.  If there is substance to that submission, it is remarkable there is no evidence of enforcement action being taken in respect of the alleged settlement.  In fact, the alleged agreement was nothing more than an agreement “in principle”, the high point of which was an agreement to document a formal deed of settlement, which evidently did not occur.

9. Fourthly, the defendants’ unreasonableness submission relies upon the plaintiffs having proceeded by way of arrest of The Ship MV2000, thus committing the parties to a proceedings in the Supreme Court “for a $28,000 claim”.  It may be accepted the plaintiffs could have risked not arresting the ship and still managed to ensure that they were paid what they were owed.  However, that they were lawfully entitled to act as they did, as is evidenced by the decision of Dalton J, as her Honour then was, is a consideration mitigating powerfully against the allegation of unreasonableness.  If, as the matter progressed, the defendants wanted to apply, on giving proper notice, for partial release of the security, that option was always open to them.  Additionally, given the actions of the plaintiffs, which by reason of the in rem component had the result this dispute was in the Supreme Court, were lawful, I am unwilling to infer unreasonableness in the pursuit of it in this Court.  Further, if it matters, it is not submitted that either side ever proposed to the other that the parties consent to pursuing their dispute in a lower court or that either pursued an application or proceeding calculated at the dispute being heard in a lower court.

10. Fifth, and finally, it was submitted the plaintiffs had conducted themselves during the course of the proceedings, including at trial, in a manner that was inconsistent with their overriding obligation to avoid undue delay, expense or technicality to resolve the proceeding.  Part of that submission relied upon the plaintiffs’ lack of engagement in the defendants’ attempt to create a so-called trial book.  I am unpersuaded that extended to unreasonableness as distinct from a lack of proper understanding.  Moreover, matters did not ever reach the point where an informed conclusion about either could be reached, because, well prior to the trial, I vacated a number of orders made by another Judge, removing the need for such a book.

11. The more substantial aspect of the plaintiffs’ fifth complaint arose from the litigation of this matter involving an 11-day trial.  It would have taken materially less time had the plaintiffs been legally represented.  They were not.  It is unsurprising that as self-represented litigants, they did not have the same ability to litigate the case as speedily and efficiently as a competent lawyer.  It was submitted, though, that the plaintiffs’ conduct was grossly wasteful of court time.  There is some substance to that submission in that at times during the proceeding, despite repeated directions by me as to the correct and efficient approach to be taken in respect of an array of logistical aspects of the litigation, the plaintiffs repeatedly took an incorrect and inefficient approach.  However, I had the strong impression this was a result of ineptitude, not deliberate time wasting. 

12. More importantly, it can scarcely be said the plaintiffs were the only sinners in the unnecessary prolonging of the proceeding.  Paragraphs [301] to [309] of the judgment explain how the defendants pursued a time consuming, but irrelevant alleged breach of maritime law.  In advancing a counterclaim that was, to a large extent, unsuccessful, the defendants failed to adduce prima facie evidence in support of substantial components of it.  It is one thing to advance material components of a counterclaim of which there is prima facie evidence, but which is unsuccessful.  It is quite another to advance material components of a counterclaim without advancing prima facie evidence in support of it.  To do so is suggestive either of the type of time-wasting ineptitude the defendants attribute to the plaintiffs or of forensically motivated persistence in claims which it should have been realised could not succeed.  Either way, it involves a quality of unreasonableness, which at least balances the quality of unreasonableness now complained of about the plaintiffs.

13. Once the complaints of the defendants are swept away, the remaining costs equation is, as commonly occurs, where one side has enjoyed significant but not complete success in litigation. 

14. The general rule manifest in r 681 Uniform Civil Procedure Rules is that the costs of the proceeding are in the discretion of the Court “but follow the event, unless the court orders otherwise”.

15. Of the event referred to in r 681, Muir JA observed in Alborn & Ors v Stephens & Ors [2010] QCA 58 at [8]:

    “The event” is not to be determined merely by reference to the judgment or order obtained by the plaintiff or appellant, but is to be determined by reference to, “the events or issues, if more than one, arising in the proceeding.”  However, a party which has not been entirely successful is not inevitably or even, perhaps, normally deprived of some of its costs.

16. Rule 684 contemplates the possibility of a court making an order for costs in relation to a particular part of a proceeding.  That course may present difficulties for costs assessors, as explained by Morrison JA in Day v Humphrey [2018] QCA 321 [9]–[13]. So, the preferable approach may be to award a proportion of costs, having regard to the parties’ mixed degrees of success in respect of the events and issues in respect of them. In the present case, having regard to the history of this litigation as well as the mix of considerations relevant to its resolution, the preferable course is to avoid further complication and simply award a proportion of the costs to one side.

17. In the present case, the only pivotal event to resolve favourably to the defendants was the finding that the plaintiffs had repudiated, along, of course, with its consequences.  That finding meant that the plaintiffs were not entitled to payment for invoiced work purportedly performed after the defendants’ acceptance of the repudiation, which accounts for a majority proportion of the $6,688.59, by which their claim to $28,080.49 was reduced.  The balance of the reduction involved some adverse conclusions about six earlier claimed miscellaneous amounts, totalling $1,753.40.  The finding also led to the consequential liability of the plaintiffs to compensate the defendants for the cost of arranging to install a replacement project manager, a cost they would not have incurred but for the repudiation.  That amount of $5,358.67 accounted for a small minority of the substance of the counterclaim to $97,517.41.

18. The repudiation, its consequences and the miscellaneous six disallowed earlier claimed amounts involved relatively undemanding issues to litigate.  In contrast, it is to be appreciated that a very substantial proportion of the trial was consumed with a debate about the quality of the project management work performed by the plaintiffs.  This argument underpinned much of the counterclaim and was unsuccessful.  As earlier mentioned, another substantial complaint of the defendants related to an alleged breach of maritime law by the plaintiffs, which turned out to be irrelevant.  Further, the defendants pursued various challenges to the legitimacy of various amounts invoiced by the plaintiffs, most of which were unsuccessful.

19. In my assessment, the repudiation, its consequences and the miscellaneous six disallowed earlier claimed amounts constituted about 15 per cent of the issues at trial and the balance of the events constituted about 85 per cent of the issues in the trial.  Moreover, that balance consumed at least 85 per cent of hearing time and would have consumed a like proportion of the parties’ time, expense and work in the litigation.

20. It is uncontroversial that the plaintiffs’ 85 per cent proportionate success in the events and associated issues is so significant as to result in a costs order in their favour.  Allowing that the defendants incurred their own costs to the extent of only 15 per cent success suggests the net, namely 70 per cent, is an apt proportion of the plaintiffs’ costs to be payable by the defendants.

21. In a real sense, the trial outcome reflected the substantial success of the plaintiffs up to the point of repudiation and the success of the defendants thereafter.  Accepting the plaintiffs ought not have been put to the cost of proving the former and the defendants to the latter, while also bearing in mind the discounting impact of the defendants’ very modest degree of success in an exercise resulting in a singular costs order in favour of one party, in my consideration that result ought involve the defendants being responsible for 70 per cent of the plaintiffs’ costs, to be assessed on the standard basis.

22. Despite order 3 made at the time of judgment, the parties advanced no submissions regarding the release of Fortitude’s security.  That release, and whether part of it is to be deployed in payment of the costs order, is unlikely to be the subject of dispute.  However, given the absence of submissions about it at the costs hearing, I will, in caution, give the parties liberty to apply in connection with the security.

23. My orders are: 

    1.   The defendants will pay the plaintiffs 70 per cent of the plaintiffs’ costs of the proceeding, to be assessed on the standard basis;

    2.   Liberty to apply in connection with the security on the giving of two business days’ notice in writing.