Neilsen v. Gray
[2008] QDC 324
•24 November 2008
DISTRICT COURT OF QUEENSLAND
CITATION: Neilsen v Gray [2008] QDC 324 PARTIES: Bevan Vivian Neilsen and
Patricia Mary Neilsen
(Plaintiffs)v
Lindsay Gray
(Defendant)FILE NO: 17 of 2007 PROCEEDING: Costs Judgment – Claim for declaration and return of deposit DELIVERED ON: 24 November 2008 DELIVERED AT: Southport HEARING DATE: 24 November 2008 JUDGE: C.F. Wall Q.C. ORDER: Judgment by consent for the plaintiffs against the defendant for $45,957.70. Plaintiffs to pay defendant’s costs of the proceeding to be assessed on the standard basis unless agreed. Order under Rule 690 of the Uniform Civil Procedure Rules that the solicitors for the plaintiffs repay to the plaintiffs the costs which the plaintiffs have been ordered to pay to the defendant. CATCHWORDS: COSTS – conduct of parties – plaintiffs successful in action – departure from normal rule – proceeding commenced and continued unnecessarily – negligence in doing so by plaintiffs solicitors – whether plaintiffs should pay defendant’s costs – plaintiffs ordered to pay defendant’s costs – standard basis or indemnity basis – plaintiffs solicitors ordered to pay to plaintiffs the costs payable by plaintiffs to defendant. LEGISLATION: Body Corporate and Community Management Act, ss. 223, 224.
Property Agents and Motor Dealers Act 2000, s 368.
Uniform Civil Procedure Rules, rule 690.COUNSEL: Plaintiffs: N. Cooke
Defendant: T. HoughtonSOLICITORS: Plaintiffs: KRG Law
Defendant: Ramsden Bow Lawyers
HIS HONOUR: The defendant has indicated its willingness to consent to judgment being entered for the plaintiffs in this proceeding for $40,957.70. It is also requested by the parties that certain other orders be made in relation tomoneys paid into Court.
The plaintiffs have therefore succeeded in their action. However, the defendant has asked for an order that the plaintiffs pay the defendant's costs of the proceeding on the indemnity basis.
In the normal course of events the ordinary rule would apply,namely that costs would follow the event and that the defendant would be ordered to pay the plaintiffs costs on the standard basis. The circumstances in the present case are quite different to the normal situation. Four issues arise here:
Should the normal rule that costs follow the event be departed from?
If so, should no order for costs be made or
Should an order that the plaintiffs pay the defendant's costs be made and
If so, should those costs be assessed on the standard basis or on the indemnity basis?
The defendant owned lot 47, Rhode Island, 125 Santa Cruz Boulevard, Clear Island Waters and on the tenth of May 2005 a contract was entered into whereby the defendant sold lot 47 to the plaintiffs for $471,350. A deposit of $47,125 was paid to
the defendant's agent.
By letter dated 16th of May 2005 from the solicitors for the plaintiffs to the solicitors for the defendant the plaintiffs solicitors said,
"Our clients have now carried out an inspection of body corporate records. This inspection reveals a number of defects in the common property not disclosed in the contract. These have the potential to immaterially (sic) affect our clients. Accordingly, our clients have instructed us to cancel the contract pursuant to section 224 of the Body Corporate and Community Management Act. We ask kindly that you properly authorise the agent to release the deposit to our client."
Section 224 of the Body Corporate and Community Management Act contains provisions for cancellation for breach of warranty, including the implied warranties set out in section 223. Section 368 of the Property Agents and Motor Dealers Act 2000 provides as follows:
"368(1) A buyer under a relevant contract who has not waived the cooling-off period for the relevant contract may terminate the relevant contract at any time before the cooling-off period ends by giving a signed, dated notice to the seller or the seller's agent indicating that the buyer terminates the relevant contract.
(2) If notice of termination is given under subsection 1 the relevant contract is at an end."
The termination of the contract by the plaintiffs was, according to the letter I have just referred to, a termination pursuant to section 224 of the Body Corporate and Community Management Act. It was not stated to be also a termination pursuant to section 368 of the Property Agents and Motor Dealers Act as it could have been.
The defendant purported to terminate the contract by letter dated 10 June 2005 due to the failure of the plaintiffs to attend settlement and claimed to be entitled to retain the deposit.
For present purposes, according to the correspondence before the Court, the cooling-off period ran from the 11th of May 2005 until 5 p.m. on the 17th of May 2005. Had the contract been specifically terminated under section 368 or at least had an indication been given to the vendor that the contract was being terminated under section 368, no legal proceedings at all would have been instituted, that is, matters would have come to an end and the deposit would have been repaid.
The plaintiffs in the present proceeding claim a declaration that the contract had been validly terminated and an order that the deposit of $47,135 held by the agent be refunded to the plaintiffs. That relief, as I said, would not have been necessary had the termination of the contract been specifically under section 368.
The parties signed a Certificate of Readiness for trial on the 20th of August this year, each party certifying that they were ready for trial. On the afternoon of the 21st of November last the solicitors for the plaintiffs gave notice that the plaintiffs intended to amend the statement of claim in the respects set out in the amended statement of claim handed to me this morning.
Briefly, the amendments sought were to add to paragraph 10 allegations of knowledge on the part of the defendant for the purposes of section 223 of the Body Corporate and Community Management Act and to add paragraphs 13, 14 and 15 alleging an entitlement to terminate the contract pursuant to section 368 of the Property Agents and Motor Dealers Act 2000.
After hearing argument this morning I indicated that I was minded to allow those amendments subject to making orders for costs in favour of the defendant. During the luncheon adjournment the defendant assessed his position and has agreed to the compromise of the action which I earlier indicated.
Had the contract been specifically terminated relying on section 368 of the Property Agents and Motor Dealers Act no legal costs at all would have been incurred in relation to the present proceeding because the present proceeding would not have been commenced. In my view, the commencement of the present proceeding was unnecessarily caused by the failure of the solicitors for the plaintiffs to rely on section 368 as a ground for terminating the contract.
The litigation was, in my view, completely unnecessary. The plaintiffs did not until last Friday the 21st of November indicate an intention to amend the statement of claim to rely on section 368. The plaintiffs had also not filed and served a reply and answer to the counterclaim of the defendant. The deposit moneys were paid into Court on 12 February 2008.
The plaintiffs submitted that an amendment at an earlier date could have occurred, but no application or attempt to do so was made. Even if an earlier amendment had been sought and granted, no costs since then or no further costs since then would have been incurred.
I think that, in the circumstances, it is proper to depart from the ordinary rule that costs follow the event. I think that it is proper, in the circumstances, that an order be made that the plaintiffs pay the defendant's costs of the proceeding. I don't think, however, that that order should extend to indemnity costs as opposed to costs on the standard basis.
The defendant submits that indemnity costs should be ordered because of a wilful disregard of known facts on the part of the plaintiffs or their solicitors and also on the basis that there has been misconduct in relation to the litigation. I am not satisfied that any disregard of known facts was in this case wilful as opposed to negligent or incompetent.
Likewise, I'm not satisfied that any misconduct here was more than the result of mere negligence.
There has, in my view, been improper, unreasonable or negligent conduct on the part of the plaintiffs via their solicitors in the institution and continuation of the proceeding. That is sufficient, in my view, to warrant a departure from the normal rule that costs follow the event.
It is not, in my view, sufficient to warrant going to the next stage, namely ordering that the costs be on the indemnity basis. I think that it is sufficient in all of the circumstances if the defendant have an order for costs in his favour on the standard basis.
I think, though, for the reasons I have given, that an order should also be made under rule 690 of the Uniform Civil Procedure Rules which provides as follows:
"The Court may order a lawyer to repay to the lawyer's client all or part of any costs ordered to be paid by the client to another party if the party incurred the costs because of the lawyer's delay, misconduct or negligence."
I think that the costs here have been incurred by the plaintiffs by reason of misconduct or negligence on the part of their solicitors. Negligent conduct has been held to be conduct falling short of what is expected of ordinary members of the legal profession and, in my view, that is the case here.
The orders I make then are these:
I give judgment by consent for the plaintiffs against the defendant for $45,957.70.
I order that of the money paid into Court, $1,178.38 be paid to the solicitors for the defendant and the balance be paid to the solicitors for the plaintiffs. The receipt of the solicitors shall be sufficient discharge for those payments.
I direct the Registrar of the District Court at Southport to calculate the interest which would have been payable on $47,135 between 12 August 2005 and 12 February 2008 at the rate prescribed by the Supreme Court Act from time to time and advise the solicitors for the plaintiffs of that calculation.
I order that the plaintiffs pay the defendant's costs of the proceeding to be assessed on the standard basis unless agreed.
Under rule 690 of the Uniform Civil Procedure Rules, I order that KRG Law, the solicitors for the plaintiffs repay to the plaintiffs the costs which the plaintiffs have been ordered to pay to the defendant.
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