Morton v Rexel Electrical Supplies Pty Ltd (No 2)

[2016] QDC 6

DISTRICT COURT OF QUEENSLAND

CITATION:

Morton & Anor v Rexel Electrical Supplies Pty Ltd (No 2) [2016] QDC 6

PARTIES:

GAVIN MORTON AS LIQUIDATOR OF SOUTH EAST QUEENSLAND MACHINARY MANUFACTURING AND DISTRIBUTION (MINING) NUMBER 1 PTY LTD (IN LIQUIDATION)
ACN 050 414 483

(Plaintiff)

v

REXEL ELECTRICAL SUPPLIES PTY LTD
ACN 000 437 758

(Defendant)

FILE NO/S:

4660/12

DIVISION:

Civil

PROCEEDING:

Application for costs

ORIGINATING COURT:

District Court of Queensland

DELIVERED ON:

10 February 2016

DELIVERED AT:

Brisbane

HEARING DATE:

Heard on the papers

JUDGE:

Searles DCJ

ORDER:

CATCHWORDS:

1. Declare, pursuant to r 371(2)(d) of the UCPR, that the plaintiff’s formal offer to settle dated 15 February 2013 was an effectual offer for the purposes of Chapter 9, Part 5 of the Uniform Civil Procedure Rules 1999 (Qld).

2. In relation to the application for costs in the judgment handed down on 5 March 2015:

a) Order 2 of that judgment be vacated.

b) The Defendant pay the Plaintiff an amount of interest in the sum of $23,729.51.

c) The Defendant pay the Plaintiff’s costs on an indemnity basis.

PROCEDURE – COSTS – INDEMNITY COSTS – Where Plaintiff was awarded at trial sum more favourable than what was offered to Defendant prior to trial – Whether Plaintiff’s offer to settle was a formal offer for the purposes of the rules – Whether Plaintiff is entitled to indemnity costs.

Uniform Civil Procedure Rules 1999 (Qld) rr 355(1), 360, 371

COUNSEL:

V G Brennan - Plaintiff

R C Schulte - Defendant

SOLICITORS:

Taylor David Lawyers – Plaintiff

Polczynski Lawyers – Defendant

1. On 5 March 2015, I ordered the Defendant pay the Plaintiff two sums: the amount of $132,811.01, representing unfair preference transactions, voidable pursuant to section 588FE of the Corporations Act 2001 (Cth); and interest, pursuant to section 47 of the Supreme Court Act 1995 (Qld), at the rate of 10% per annum from the date of each relevant transaction to judgment. I reserved the question of costs. The Defendant appealed the decision and on 20 November 2015 the Court of Appeal dismissed the appeal. This judgment deals with the issue of the costs of the proceeding, as well as the quantum of interest I ordered the Defendant pay.

Costs

1. The Plaintiff seeks indemnity costs under rule 360 the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) on the basis that the Defendant did not accept a former offer to settle of $130,000.00 dated 15 February 2013, being an amount less favourable than the amount I ordered the Defendant to pay the Plaintiff after trial. That offer was expressed in these terms (emphasis added):

“TAKE NOTICE that the Plaintiff makes an offer to settle the entirety of these proceedings in the following manner:
1. The Defendant pay the Plaintiff the sum of One Hundred and Thirty Thousand Dollars and Zero Cents ($130,000.00) (‘the Settlement Sum’);

2. Each party bares its own legal costs of and incidental to these proceedings;

3. The offer is made in accordance with the provisions of Chapter 9 Part 5 of the Uniform Civil Procedure Rules 1999. It is open for acceptance until 11 January 2012 but shall then lapse;

4. Acceptance of this offer may be effected by serving a written notice of acceptance on the undersigned Solicitors for the Plaintiff; and

5. The offer herein is for payment to be made by the Defendant as follows:

(a) The Settlement Sum within fourteen (14) days of acceptance.

Dated: 15 February 2013”

1. The Defendant resists the application for indemnity costs, arguing that the offer was not a formal offer to settle. Plainly, the Defendant says, the offer did not specify a period ending not less than 14 days after the day of service of the offer, during which the offer was open for acceptance.[1] It refers to the offer being open for acceptance until 11 January 2012, some 401 days prior to service on 15 February 2013. As such, it is said the offer does not give rise to the consequences of a former offer to settle, and the Defendant says that it should pay the Plaintiff’s costs on the standard basis.

   [1]Uniform Civil Procedure Rules 1999 (Qld) r 355(1).

1. The Plaintiff acknowledges the date for acceptance set out in the offer is as the Defendant says it is. Accepting that this is a case where the UCPR was not strictly complied with, the Plaintiff made application under r 371(2)(d), seeking a declaration that the offer was an effectual document for the purposes of Chapter 9, Part 5 of the UCPR. That section provides:

371 Effect of failure to comply with rules
(1) A failure to comply with these rules is an irregularity and does not render a proceeding, a document, step taken or order made in a proceeding, a nullity.
(2) Subject to rules 372 and 373, if there has been a failure to comply with these rules, the court may—

(a) set aside all or part of the proceeding; or

(b) set aside a step taken in the proceeding or order made in the proceeding; or

(c) declare a document or step taken to be ineffectual; or

(d) declare a document or step taken to be effectual; or

(e) make another order that could be made under these rules (including an order dealing with the proceeding generally as the court considers appropriate); or
(f) make such other order dealing with the proceeding generally as the court considers appropriate.

1. The basis for the application is as follows:

1.          The reference to 11 January 2012 was a clerical error.

2.          The fact that the offer asserted its acceptance could be done approximately 400 days before it was made reveals the conspicuousness of the error.

3.          The error was one that was overlooked by both parties.

4.          The Defendant rejected the Liquidator’s offer 12 days after the offer was served, evidencing there is little doubt the Defendant made a considered rejection within the usual 14-day time period in UCPR r 355(1).

5.          Apart from the error, the offer was otherwise a formal offer.

1. The Defendant submits that because the offer was plainly incapable of acceptance within the specified period, it could not be properly characterised as a formal offer to settle at all. On this basis, the Defendant submits that r 371 of the UCPR has no application.  

1. On this reading of the UCPR, the Defendant has characterised the document containing the Plaintiff’s formal offer to settle as a nullity rather than as a mere irregularity capable of remedy under r 371 of the UCPR.

1. Aside from the conspicuous error in framing a date and time for acceptance in the past, the offer complied with the formal requirements under the UCPR.

1. The formal offer to settle contained an irregularity of a date for acceptance compliance with which was impossible. It is therefore on its face ineffectual within the meaning of r 371(2)(c) and (d) of the UCPR.

1. However, it is apparent from the course of conduct of the Defendant in rejecting the offer within the usual 14 day time period that the formal offer to settle was treated by the Defendant as a valid offer capable of acceptance or rejection, which latter course the Defendant adopted in its correspondence of 25 February 2016. That correspondence, relevantly, said:

   “We refer to your reply (Reply) and the formal offer to settle (the Offer) served under your letter dated 15 February 2013.
   …
   2. The Offer and Counter-Offer
   2.1       Given what we have set out above, and the fact that your client has not taken issue with the accuracy of any authorities to which we have referred you, Rexel rejects the Offer. Rexel does not consider the Offer to realistically reflect the legal position of the parties.” (emphasis added)

2. The Defendant’s present position asserting that the offer does not bear the character of an offer within the meaning of the UCPR is at odds with its rejection of the offer and it persuades me that is appropriate to make a declaration under rule 371(2)(d) as sought by the Plaintiff. I further consider that, having rejected that offer, the Defendant should pay the costs of the Plaintiff on an indemnity basis pursuant to r 360 of the UCPR.

Interest

1. The Defendant submitted the interest payable on the judgment being reduced to $23,729.51. The Plaintiff agreed with that submission.

Orders

1. I make the following orders:-

1. Declare that pursuant to r 371(2)(d) of the UCPR, the Plaintiff’s formal offer to settle dated 15 February 2013 was an effectual offer for the purposes of Chapter 9, Part 5 of the Uniform Civil Procedure Rules 1999 (Qld).

2.          As to the costs in the judgment of 5 March 2015:

(a)        Order 2 of that judgment be vacated.

(b)        The Defendant pay the Plaintiff an amount of interest in the sum of $23,729.51.

(c)        The Defendant pay the Plaintiff’s costs on an indemnity basis.