Quigley (Liquidator) v Minesite Maintenance Pty Ltd, in the matter of Perthmetro Pty Ltd (in liq) (No 2)
[2018] FCA 431
•28 March 2018
FEDERAL COURT OF AUSTRALIA
Quigley (Liquidator) v Minesite Maintenance Pty Ltd, in the matter of Perthmetro Pty Ltd (in liq) (No 2) [2018] FCA 431
File number(s): WAD 457 of 2016 Judge(s): SIOPIS J Date of judgment: 28 March 2018 Catchwords: COSTS – the plaintiff’s claim was for $10,400 – the plaintiff was wholly successful – whether an order under r 40.08 of the Federal Court Rules 2011 (Cth) should be made reducing the costs and disbursements payable to the plaintiff. Legislation: Federal Court Rules 2011 (Cth) rr 29.09, 40.08 Cases cited: Quigley (Liquidator) v Minesite Maintenance Pty Ltd, in the matter of Perthmetro Pty Ltd (in liq) [2018] FCA 316
Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No 4) [2012] FCA 652
Date of hearing: Determined on the papers. Registry: Western Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 21 Counsel for the Plaintiff: Mr DK Cooper Solicitor for the Plaintiff: Cooper Legal Counsel for the Defendant: Mr FA Robertson Solicitor for the Defendant: Fort Knox Legal ORDERS
WAD 457 of 2016 IN THE MATTER OF PERTHMETRO PTY LTD (IN LIQUIDATION) (ACN 077 480 614)
BETWEEN: PETER REYMOND QUIGLEY IN HIS CAPACITY AS LIQUIDATOR OF PERTHMETRO PTY LTD (IN LIQUIDATION) (ACN 077 480 614)
Plaintiff
AND: MINESITE MAINTENANCE PTY LTD (ACN 009 180 367)
Defendant
JUDGE:
SIOPIS J
DATE OF ORDER:
28 MARCH 2018
THE COURT ORDERS THAT:
1.The defendant pay $10,400 to the plaintiff.
2.The defendant pay the plaintiff’s costs of the application, including reserved costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
SIOPIS J:
On 14 March 2018, I gave judgment in favour of the plaintiff and made orders that the parties file minutes of proposed orders and submissions as to costs (Quigley (Liquidator) v Minesite Maintenance Pty Ltd, in the matter of Perthmetro Pty Ltd (in liq) [2018] FCA 316).
The plaintiff relied on an affidavit of Mr Damian Cooper of 19 March 2018. Mr Cooper is the plaintiff’s solicitor and he annexed to his affidavit correspondence between the parties’ solicitors. This correspondence evidenced the following.
By a letter dated 5 October 2016, the plaintiff’s solicitors made a Calderbank offer to settle the plaintiff’s claim for a total of $9,800 “being representative of $7,800 as to the claim and $2,000 contribution towards my client’s legal costs (including court filing fees of $1,290) in the matter so far”. The letter stated that the offer was open for acceptance for 10 days. There was no response by the defendant’s solicitors in evidence.
On 9 December 2016, the plaintiff’s solicitors by email invited the defendant’s solicitors to put a proposal to settle the matter. There was no response to that invitation in the evidence.
On 31 January 2017, the plaintiff’s solicitors again invited the defendant’s solicitors to make a settlement offer before the plaintiff paid a setting down fee of $2,570. Later that day, the plaintiff’s solicitors repeated the offer that they had made by their letter of 5 October 2016.
On the following day, the defendant’s solicitors replied as follows:
We received instruction from our client:
Ÿnot to accept the proposed settlement offer made by your client; and
Ÿnot to provide a counterproposal,
and propose that we seek orders programming the matter to hearing.
The setting down fee was then paid and the matter went to a hearing.
The plaintiff does not rely upon this evidence to argue that there should be an order for indemnity costs against the defendant. Rather, the plaintiff relies on this evidence in response to the defendant’s submission that by reason of r 40.08 of the Federal Court Rules 2011 (Cth) (the Rules) there should be no order for costs, alternatively, that the costs recovered by the plaintiff in this proceeding should be reduced to $2,600 and not exceed that amount.
Rule 40.08 of the Rules provides as follows:
A party other than in a proceeding under the Admiralty Act 1988 may apply to the Court for an order that any costs and disbursements payable to another party in the proceeding be reduced by an amount to be specified by the Court if:
(a)the applicant has claimed a money sum or damages and has been awarded a sum of less than $100 000; or
(b)the proceeding (including a cross‑claim) could more suitably have been brought in another court or tribunal.
The defendant contends that the plaintiff’s claim was for $10,400, that the matter was relatively simple and that it should not have been brought in this Court. Rather, contended the defendant, the application should have been made in the Magistrates Court of Western Australia (the Magistrates Court) where the court fees are very much lower and there was no requirement for the defendant to be represented by a lawyer.
It is indeed unusual for a claim of $10,400 to be brought in this Court. It is also apparent that by reason of that circumstance, r 40.08 of the Rules applies and it is open to the Court to make an order that the costs and disbursements payable by the defendant to the plaintiff be reduced.
I do not accept the defendant’s submission that the appropriate course for the plaintiff to have adopted was to bring the proceeding in the Magistrates Court. This is because the law relating to the recovery of unfair preferences under the Corporations Act 2001 (Cth) can give rise to some difficult legal issues which are not normally considered and determined in the Magistrates Court.
One matter to be considered in determining whether to exercise the discretion under r 40.08 in favour of a party is whether that party had acted consistently with the overarching purpose for the conduct of litigation in this Court.
In the case of Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No 4) [2012] FCA 652 at [25], Katzmann J observed:
The discretion to award costs must be exercised in the way that best promotes the overarching purpose of the civil procedure provisions of the FCA Act and Rules: FCA Act, s 37M(3). That purpose is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: FCA Act, s 37M(1). Parties have a duty to conduct proceedings (including settlement negotiations) in a way that is consistent with the overarching purpose: FCA Act, s 37N(1). Their lawyers are required to take account of that duty and assist their clients to comply with it. In exercising the discretion to award costs, I am obliged to take into account any failure to comply with the duty imposed by s 37N(1) or (2).
In my view, the defendant did not act in accordance with the overarching purpose in the manner in which the defendant through its solicitors responded to the overtures of the plaintiff’s solicitors in attempting to settle the claim. The plaintiff’s solicitors made an offer to settle early in the proceeding and then on two later occasions invited a counterproposal, but none was forthcoming. In my view, particularly in light of the nature of the affidavit evidence which was relied upon by the defendant at the hearing, this was a case in which a party acting in accordance with the overarching purpose would have made a counterproposal in an attempt to settle the case. It is relevant that the plaintiff’s solicitors brought to the attention of the defendant’s solicitors that a setting down fee of $2,570 would be incurred if the matter was set down for trial, and before incurring that fee, invited a counterproposal and then repeated the plaintiff’s offer to settle. However, a day later the defendant’s solicitors rejected the offer and made no counterproposal.
Accordingly, in the full knowledge that fees had been, and would be incurred by the plaintiff in setting the matter down for trial, the defendant through its solicitors declined to engage in the negotiations in an attempt to settle the matter.
As I have said, the course which the defendant proposed as being the appropriate forum for the conduct of this litigation, namely, in the Magistrates Court, is not, in my view, reasonable. It would have been open to the plaintiff to have commenced this proceeding in the District Court of Western Australia or Supreme Court of Western Australia, but the defendant has not contended that the plaintiff should have proceeded in either of those two forums. Further, there was no evidence before the Court that had the plaintiff commenced this claim in either of those two courts the costs and disbursements would have been significantly different.
In my view, therefore, this is not an appropriate case for making an order for the reduction of costs and disbursements under r 40.08 of the Rules. The fact that the parties were required to incur the costs and disbursements which they did, was largely due to the intransigence of the defendant. I also observe that the plaintiff has not sought to rely upon the letter of 5 October 2016 to claim indemnity costs.
The defendant also contended that there should be a separate order for costs made against the plaintiff in the sum of $550 by reason of the adjournment of a hearing on 30 March 2017.
The hearing was adjourned on 30 March 2017 because when the plaintiff tendered the affidavit of Mr Peter Quigley, the defendant’s counsel indicated that the defendant required Mr Quigley for cross-examination and Mr Quigley was not present in Court. The defendant, however, had not given a notice under r 29.09 of the Rules that it required Mr Quigley to attend for cross-examination. Accordingly, the defendant’s contention that the plaintiff should pay $550 in costs by reason of the adjournment of the hearing on 30 March 2017 is rejected.
Accordingly, I will order that the defendant pays the plaintiff’s costs, including reserved costs.
I certify that the preceding twenty‑one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate
Dated: 28 March 2018
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