Pollock Holdings (Queensland) Pty Ltd v Rodcar Pty Ltd

[2011] QDC 33

[2011] QDC 33

DISTRICT COURT

CIVIL JURISDICTION

JUDGE JONES

No 2918 of 2010

POLLOCK HOLDINGS (QUEENSLAND) PTY LTD	Plaintiff
and
RODCAR PTY LTD AND ORS	Defendants

BRISBANE

..DATE 25/02/2011

ORDER

HIS HONOUR:  On 12 October 2010 the plaintiff as a landlord
commenced proceedings against the first defendant as a tenant
and the second and third and fourth defendants as guarantors.
The Claim effectively seeks arrears of rent, interest and
costs.  There was no counterclaim by any of the defendants.

The defendants filed a defence raising a number of matters
and, in particular, that the lease was not of a commercial
character, that the terms of the lease were unconscionable and
that the first defendant had entered into the lease under
economic duress.  There were also allegations that the
plaintiff had failed to mitigate and that the guarantee was
void because the second, third and fourth defendants were not
availed of the opportunity to obtain legal advice.

Notwithstanding those defences, payments were made by the
defendants to the plaintiff in part payment of the amount
claimed including a payment of $5,000 on 8 December 2010.  The
plaintiff applied for summary judgment on 17 December 2010
seeking judgment for the balance.

Following that, the defendants paid to the plaintiff a number of further payments, including one $7,000 payment on
27 January 2011.  The net effect of these payments is that the
whole of the amount claimed under this Statement of Claim has
now been paid.  The only matter that is left for determination
in reality is now the question of any entitlement of the
plaintiff to costs.  The plaintiff is seeking in addition to
the costs of and incidental to this application, the other
costs it has incurred in respect of the proceedings to date
and seeks costs on an indemnity basis, relying on clause 3.4.1
of the lease.

Costs are resisted, essentially for three reasons which were
identified by Ms Dixon in her outline of argument.  They are,
first, that before the plaintiff can claim a judgment there
has to be an amount owing and there no longer is any amount
owing.  Two, before the defendant can claim any costs for
summary judgment, on a summary judgment application, he has to
first bring the application.  And, there is no longer any extant application then, as I understand the argument, no costs can follow.  Last, that the defendant says that notwithstanding the existence of bona fide defences on the merits which cannot be determined summarily, the plaintiff then could not succeed and accordingly, no cost should follow.

In my opinion none of the matters raised provide a defence to
an order for costs.  The first of the matters, in my view, is
artificial.  It would, in effect, deny any successful party
recovering costs, notwithstanding the settlement of the
primary action as late as on the date of the hearing of
proceedings.  In my view a defendant cannot avoid the cost
ramifications of proceedings by simply paying out the amount
claimed.

As to the need to win an application, the application for

summary judgment has become redundant because the defendants
have paid the whole of the amount claimed.  Accordingly, the
merits of the defence will never be able to be tested.  That is really a matter which lies at the defendants' feet and does
not provide a reason for denying the plaintiff costs, in my
view.

I might add there that, in my view, the defences raised do not
appear to be particularly strong but I do not need to decide
that matter further.

Accordingly, in my view the plaintiff is entitled to its
costs.

The final question is to be determined is whether or not costs
should be on an indemnity basis.  Clause 3.4.1 of the lease deals with the question of lessor's costs. The relevant part of that clause provides:

"And in the case of default by the lessee in performing or
observing any covenance herein contained or implied the lessee
shall pay to the lessor all legal expenses (calculated on a
solicitor and own client basis) and other costs, charges and
expenses for which the lessor shall become liable in
consequence of or in connection with such default."

In my view, the proceedings in issue are of or in connection
with default on behalf of the defendants.

Mr Forde, counsel for the applicant/plaintiff, referred me to
two decision, Mid Australia and Around Australia [2005] QSC 91
and Gomer Holdings UK Limited and Ors and Binaries Finance
Limited and Ors No 2 [1993] Chancery 171 as authority for the
proposition that where there is contractual rights to costs
specified within the contract then the discretion to exercise
costs should ordinarily be exercised to reflect the
contractual rights.

Those submissions advanced by Mr Forde were not really
challenged by Ms Dixon and I can see no good reason to depart
from that approach.

Accordingly, the orders will be that the defendants are to pay
the plaintiff's costs of the proceedings up to 25 February
2011 on a solicitor and own client basis.

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