Platypus Catering Pty Ltd v Bronte Terrace Pty Ltd

[2020] QDC 313

DISTRICT COURT OF QUEENSLAND

CITATION:

Platypus Catering Pty Ltd v Bronte Terrace Pty Ltd & Anor [2020] QDC 313

PARTIES:

PLATYPUS CATERING PTY LTD
ACN 162 736 727 AS TRUSTEE FOR THE ROBYN SHEPPARD FAMILY TRUST

(plaintiff)

v

BRONTE TERRACE PTY LTD
ACN 064 799 426

(defendant)

and

ROBYN BENITA SHEPPARD

(defendant added by counterclaim)

FILE NO:

4 of 2017

DIVISION:

Civil

PROCEEDING:

Claim

ORIGINATING COURT:

Cairns

DELIVERED ON:

4 December 2020

DELIVERED AT:

Cairns

HEARING DATE:

31 October 2019, 1, 25 November 2019, 13 November 2020.

JUDGE:

Morzone QC DCJ

ORDER:

1.   The defendant will pay the costs of the proceeding of the plaintiff (including reserved costs) to be assessed on the indemnity basis.

2.   The defendant will pay the costs of the proceeding of the defendant by counterclaim (including reserved costs) to be assessed on the standard basis up to and including 25 January 2018 and thereafter on the indemnity basis.

CATCHWORDS:

CIVIL PROCEDURE – APPLICATION – COSTS – where indemnity costs sought – where judgment no less favourable than offer to settle – whether different costs order appropriate in the circumstances.  

LEGISLATION:

Uniform Civil Procedure Rules 1999 (Qld) rr 360, 703 & 681

CASES:

Latoudis v Casey (1990) 170 CLR 534

Oshlack v Richmond River Council (1998) 193 CLR 72

COUNSEL:

C Ryall for the Plaintiff

S Hogg for the Defendant

C Ryall for the Defendant added by Counterclaim

SOLICITORS:

Kahler Lawyers for the Plaintiff
Trianon Law for the Defendant
Kahler Lawyers for the Defendant added by Counterclaim

1. The plaintiff and the defendant by counterclaim apply for costs in the wake of the successful claim (and dismissal of the defendant’s counter-claim) subject of the decision delivered on 13 November 2020. 

2. The plaintiff argues that its costs ought be assessed on the indemnity basis because the defendant failed to accept the plaintiff’s offer to settle communicated on 25 January 2018 to the effect that the defendant pay the plaintiff $100,000 plus costs on the standard basis.[1]  The plaintiff also maintains that if there is to be a broader consideration of the discretion about the order for costs the court should also consider a subsequent offer made by the plaintiff and the defendant added by counterclaim under the rules to accept $60,000 plus costs.  The defendant by counterclaim applies for her costs to be assessed on the standard basis and thereafter the indemnity basis.

   [1]UCPR, r 360(2).

3. The defendant accepts an order for costs ought be made in favour of the plaintiff and the defendant by counterclaim, but disputes that the plaintiff’s costs should be assessed on the indemnity basis, mainly in reliance upon the capacity to assess quantum having regard to the findings about the method of expert assessment.

4. I have allowed the applications for costs and order accordingly.

   Plaintiff’s Costs

5. The court has a broad power to award costs in a proceeding.[2] 

   [2]Civil Proceedings Act 2011 (Qld), s 15.

6. The costs of a proceeding do not include the costs of an application in the proceeding, unless the court orders otherwise.[3]  Reserved costs of an application will follow the event, unless the court orders otherwise.[4]

   [3]UCPR, r. 693.

   [4]UCPR, r. 698.

7. The general rule pursuant to r 681 of the Uniform Civil Procedure Rules 1999 is that costs of a proceeding are in the discretion of the court but follow the event, unless the court orders otherwise. This statutory conferral of jurisdiction to award costs gives this Court the widest possible power and discretion in the allocation of costs. The discretion must be exercised judicially, that is to say, not arbitrarily, capriciously or so as to frustrate the legislative intent.[5]  It follows that costs must necessarily be awarded on principle, not according to whim or private opinion.  And in doing so, the Court should not lose sight of the fundamental principle that costs orders serve a compensatory function, not a punitive one.[6]  

   [5]Oshlack v Richmond River Council (1998) 193 CLR 72 at 81 per Gaudron and Gummow JJ

   [6]Latoudis v Casey (1990) 170 CLR 534 at 543 per Mason CJ, at 563 per Toohey J, at 567 per McHugh J; 97 ALR 45; Oshlack Richmond River Council (1998) 193 CLR 72 at 97; [1998] HCA 11; BC9800310 per McHugh J.

8. Costs are ordinarily assessed on the standard basis, unless the rules or a court order requires assessment on an indemnity basis.[7]

   [7]UCPR rr 360 (formal offer by plaintiff), 361 (formal offer by defendant), 701 (standard), 703 (indemnity).

9. The rules encourage parties to take a reasonable approach to the conduct of the case, negotiations, and offers by imposing a sanction on a party who unreasonably fails to accept an offer.[8] Under r 360 where a defendant does not accept an offer to settle and the plaintiff obtains a judgment no less “favourable” to the plaintiff than the offer, then the defendant is liable to pay the plaintiff's indemnity costs, from the beginning of the proceeding, unless the defendant shows that another order is proper in the circumstances.[9] An order for indemnity costs against the defendant is the sanction for rejecting an offer to settle. The term "indemnity costs" is unqualified, so the court would order the defendant to pay the plaintiff's costs from the time the plaintiff instructed his solicitor to commence the proceedings. Indemnity costs are defined and the court’s jurisdictions to grant them are set out in r 703.

   [8]UCPR, rr 352 and 702.

   [9]The court has the power to make another order as to costs if it thinks it “appropriate”: Davies v Fay [1995] 1 Qd R 509 per Mackenzie J. This case was cited in Mitchell v Pacific Dawn Pty Ltd [2003] QSC 179 per Ambrose J.

10. The court retains its discretion over costs but unless the defendant shows that some other order is proper, the plaintiff is entitled to indemnity costs if the plaintiff obtains judgment at least as “favourable” as the plaintiff's offer.

    Is another costs order proper in the circumstances?

11. The defendant submits that despite the plaintiff ‘obtaining an order no less favourable than the offer’ the Court should exercise its discretion under r 360 to order that the plaintiff should only have its costs on the standard basis. This is because the plaintiff’s best quantum assessment rested on the expert evidence of Mr Parry whose reasoning was not accepted,[10] and therefore, there was no clear evidence on which the defendant could make a decision about quantum. Therefore the defendant argues that it was not unreasonable for the defendant to reject the plaintiff’s offer. The defendant submits that the costs order for the plaintiff should be on assessed on the standard basis and exclude the plaintiff’s costs and disbursements associated with Mr Parry’s evidence.

    [10]Decision at [114], [116], [117], [120], [122].

12. While I did not accept Mr Parry’s methodology, and thereby acceded to the defendant’s arguments, I otherwise found Mr Parry to be qualified and honest in his forensic work and opinions.  His report accurately distilled the financial position of the plaintiff and proved very helpful in reaching my judgment of $150,000 for the loss of bargain.  I was able to equate the assessment of trading losses with about 70% of the purchase price, which also included goodwill and subsumed the claim about plant and equipment. 

13. The defendant demonstrated, through its counsel, that there was clear evidence on which the defendant could make a decision about quantum.

14. In my view, the defendant has not shown that another order is proper in the circumstances.  Since the defendant did not accept an offer to settle and the plaintiff who obtained a judgment no less “favourable” to the plaintiff than the offer, the defendant ought, in the interests of justice, pay the plaintiff's indemnity costs, from the beginning of the proceeding.

    Defendant added by counterclaim

15. The defendant added by counterclaim was a party to the offer as made under the rules.  As a defendant to a counterclaim, Ms Sheppard does not have the advantage of rule 360 but does have the benefit of an indemnity costs order from the date of the offer by virtue of rule 361.

16. In that context, for the reasons expressed above, it seems to me that the costs of the defendant added by counterclaim should be assessed on the standard basis up to and including 25 January 2018 and thereafter on the indemnity basis.

    Orders

17. For these reasons, I will allow indemnity costs for the plaintiff and make the following orders:

1.          The defendant will pay the costs of the proceeding of the plaintiff (including reserved costs) to be assessed on the indemnity basis.

2.          The defendant will pay the costs of the proceeding of the defendant by counterclaim (including reserved costs) to be assessed on the standard basis up to and including 25 January 2018 and thereafter on the indemnity basis.

Judge Dean P Morzone QC