RNL Sons Pty Ltd as Trustee for the ZNX Family Trust v TMDF Pty Ltd (No 2)
[2024] QMC 9
•25 July 2024
MAGISTRATES COURTS OF QUEENSLAND
CITATION:
RNL Sons Pty Ltd as Trustee for the ZNX Family Trust v TMDF Pty Ltd (No 2) [2024] QMC 9
PARTIES:
RNL SONS PTY LTD (as trustee for the ZNX Family Trust)
(Plaintiff)
v
TMDF PTY LTD
(Respondent)
FILE NO/S:
M 354/22
DIVISION:
Magistrates Courts
PROCEEDING:
Application for costs
ORIGINATING COURT:
Brisbane Magistrates Court
DELIVERED ON:
25 July 2024
DELIVERED AT:
Brisbane Magistrates Court
HEARING DATE:
On the papers
MAGISTRATE:
J. Pinder
ORDER:
(1) The plaintiff pay the defendant’s costs of the proceedings to be assessed on a standard basis.
(2) The defendant’s standard costs be assessed by a Cost Assessor.
CATCHWORDS:
COSTS – INDEMNITY OR STANDARD BASIS
CALDERBANK OFFERS
Offer to settle ch 9, pt 5, r 361.
Fixing costs, r 693.
AUTHORITIES:
Calderbank v Calderbank [1976] Fam 93, [1975] 3 AII ER 333 (EWCA).
Peter Carter Transport Pty Ltd and Anor v Swansaway No. 2 Pty Ltd [2021] QDC 109, para 46.
Springfield City Group Pty Ltd v Pipe Networks Pty Ltd (No 2) [2022] QSC 299.
COUNSEL:
PG Jeffery for the plaintiff
RW Tooth for the defendant
SOLICITORS:
P Porta Lawyers for the plaintiff
Bennett Caroll Solicitors for the defendant
I delivered judgement in this matter on 27 February 2024 (RNL Sons Pty Ltd (as trustee for the ZNX Family Trust) v TMDF Pty Ltd [2024] QMC 4). I gave judgement for the defendant against the plaintiff, effectively, the plaintiff’s claim was dismissed.
In respect of costs, I directed that in the event that costs were not agreed between the parties, that they were each to file written submissions. Upon receipt of those written submissions, the question of costs was to be determined on the papers.
The plaintiff’s submissions on costs makes this significant concession: -
· “The plaintiff having failed on its claim concedes that the costs should follow the event, but on a standard basis, not an indemnity basis.”[1]
[1] See plaintiff’s submission on costs (08/03/2023), para 1.
The plaintiff accepts it must pay the defendant’s costs of the proceedings. The issue to be determined is the basis on which those costs should be assessed – the standard basis as the plaintiff submits, or the indemnity basis as the defendant submits, (having regard to various offers to settle made by the defendant). The contract for sale of the business, the subject of this claim, was entered into on 4 May 2021.[2]
[2]RNL Sons Pty Ltd (as trustee for the ZNX Family Trust) v TMDF Pty Ltd [2024] QMC 4, para 34.
The proceedings were commenced by claim and statement of claim filed on 1 March 2022.
The defendant made two pre-proceeding offers to settle as follows: -
· 16 June 2021 – an offer to pay the plaintiff $5,000.
· 28 June 2021 – an offer to pay the plaintiff $10,000.
The offers to settle were both stipulated to be Calderbank offers.[3]
[3]Calderbank v Calderbank [1976] Fam 93, [1975] 3 AII ER 333 (EWCA).
Neither of these offers foreshadowed any application for costs on the indemnity basis.
The defendant then made two post-commencement offers as follows: -
· 14 April 2022 – an offer to pay the plaintiff $28,000.
· 6 May 2022 – an offer to pay the plaintiff $41,000.
The post-commencement offers: -
· Were expressly made pursuant to ch 9 pt 5 of the Uninform Civil Procedure Rules (UCPR).
· Alternatively, were expressed to be made in accordance with the Calderbank principles.
· Did foreshadow an application for costs on the indemnity basis if the offer was rejected.
Both the pre-proceedings offers, and post-commencement offers were rejected by the plaintiff. No further offers were made by the defendant. The proceedings continued and the trial ultimately took place in March 2023.
The relevant principles in relation to Calderbank offers were summarised by Bond J in Springfield City Group Pty Ltd v Pipe Networks Pty Ltd (No 2) [2022] QSC 299 at [9]. His Honour identified the following as the relevant proposition, which I adopt:
“First, the usual rule is that where the Court orders the costs of one party to the litigation to be paid by another party, the order is for assessment of those costs on the standard basis.
Second, the Court will depart from the usual rule where the circumstances of the case warrant that course.
Third, one feature which may justify a departure from the usual rule is the rejection of a Calderbank offer to compromise. However, it is wrong to think that an offeree’s rejection of a Calderbank offer gives rise to a presumption that the offeree should pay the offeror’s costs on an indemnity basis if the offeree obtains a less favourable result than contained in the offer. Rather, the correct approach is to consider whether the rejection of the Calderbank offer, in all the circumstances, justifies a departure from the usual rule.
Fourth, the balance between the competing policy considerations of, on the one hand, appropriately encouraging settlement and, on the other, not discouraging potential litigants from bringing their disputes to the courts, is found by applying a test of ‘reasonableness.’ The policy rationale for requiring the offeree to indemnify the offeror for costs incurred after the offeree’s unreasonable rejection of an offer is that, from the time of the unreasonable rejection, notionally the real cause and occasion of the litigation is the unreasonable attitude adopted by the offeree.
Fifth, deciding the critical question of whether the offeree’s rejection of the offer is unreasonable in all the circumstances will always involve matters of judgement and impression. However, the discretion as to costs must be exercised judicially and is subject to review in accordance with the principles set out in House v R (1936) 55 CLR 499 at 505. Without being exhaustive concerning the considerations which should be taken into account, a court should ordinarily have regard to at least the following matters:
(a) The stage of the proceeding at which the offer was received;
(b) The time allowed to the offeree to consider the offer;
(c) The extent of the compromise offered;
(d) The offeree’s prospects of success, assessed as at the date of the offer;
(e) The clarity with which the terms of the offer were expressed; and
(f) Whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it.”
The plaintiff has not obtained an order that is more favourable than any of the defendant’s four offers to settle.
The defendant has the benefit of: -
· Two pre-proceedings offers (expressed to the Calderbank offers – but neither expressly saying the offers would be relied upon to seek indemnity costs).
· Two post-commencement offers being offers pursuant to ch 9 pt 5 of the UCPR or in the alternative Calderbank offers – in the latter case foreshadowing that they would be relied upon to seek indemnity costs.
The defendant’s offers to settle of 14 April 2022 and 6 May 2022 were expressed to be in accordance with ch 9 pt 5 of the UCPR.
Rule 361 UCPR deals with costs if offer by defendant.
The current form of r 361 was amended from 23 June 2023. It is in different terms to the previous rule. It is r 361 (prior to amendment) which is applicable to the defendant’s two offers to settle.[4]
[4] r 1003
Rule 361 UCPR in force at the time of these offers and applicable to this matter relevantly provides: -
(1) This rule applies if –
(a) The defendant makes an offer that is not accepted by the plaintiff and the plaintiff does not obtain an order that is more favourable to the plaintiff than the offer; and
(b) The court is satisfied that the defendant was at all material times willing and able to carry out what was proposed in the offer.
(2) Unless a party shows another order for costs is appropriate in the circumstances, the court must –
(a) Order the defendant to pay the plaintiff’s costs, calculated on the standard basis, up to an including the day of service of the offer; and
(b) Order the plaintiff to pay the defendant’s costs, calculated on a standard basis, after the day of service of the offer
(3) (Not applicable)
(4) If the defendant makes more than 1 offer satisfying subrule (1), the first of those offers is taken to be the only offer for this rule.
The plaintiff has not obtained an order more favourable than the defendant’s offers to settle. Rule 361 therefore entitles the defendant unless the party shows another order for costs as appropriate in the circumstances – to: -
· An order the defendant pay the plaintiff’s costs calculated on a standard basis to the date of service of the offer.
· An order that the plaintiff pay the defendant’s costs calculated on a standard basis after the date of this service of the offer.
Therefore r 361 and the offers to settle of 14 April 2022 and 6 May 2022 do not on the face of the material entitle the defendant to its costs calculated on an indemnity basis.
The correspondence enclosing by way of service the two offers to settle under ch 9 pt 5 purport to maintain that in the alternative the offers ought be regarded as Calderbank offers with the plaintiff on notice that the defendant may seek indemnity costs. Neither party has provided authority for the proposition that the offers to settle can at once both be a formal offer to settle under ch 9 pt 5 and a Calderbank offer. The offers to settle of 14 April 2022 and 6 May 2022 ought and are regarded as offers to settle under ch 9 pt 5 and as already observed, do not support an entitlement to the defendant to an order for costs assessed on an indemnity basis.
Notwithstanding that r 361 UCPR would only entitle the defendant to its costs from the date of the first offer to settle of 14 April 2022 onwards, the plaintiff concedes in its outline that the defendant ought recover all its costs of the action to be assessed on a standard basis.
In considering the pre-proceedings Calderbank offers made 1 June 2021 and 28 June 2021, the relevant considerations summarised by Bond J. in Springfield City Group Pty Ltd (ibid) are to be applied for consideration from (a) to (f).
In particular, the fifth and critical question in the propositions is relevantly considered as follows: -
· Both offers were made pre-proceedings and at a very early stage of the proceedings at a time where the contract for sale had effectively ended.
· Each offer was expressed to be open for acceptance for 10 working days only – that is, a short time allowed to the offeree to consider the offer.
· The extent of the compromise offered included a requirement for the offeree to confirm that the contract was validly terminated (as a consequence dealing with other rights and entitlements of the parties).
· The offerees prospects of success assessed at the date of the offers would be difficult, if not impossible, to determine.
· The offers were expressed in clear terms.
· The offers did not foreshadow an application for indemnity costs in the event of the offeree rejecting the offer.
In all the circumstances I am not persuaded that it can be said to have been unreasonable, in the sense of justifying an award for indemnity costs, for the plaintiff to reject the offers to settle of 1 June 2021 and 28 June 2021. That being the case, I am not satisfied that there is a basis to depart from the usual rule. The pre-proceedings Calderbank offers do justify, as is conceded by the plaintiff, an entitlement for the defendant to recover its costs of the entire action, but with those costs to be assessed on a standard basis.
The defendant’s submissions also seek that the court fix costs, as opposed to ordering that the costs be assessed. In the Magistrates Court, the court may order that the costs of a proceeding be assessed by a Cost Assessor– if the Magistrate considers it appropriate because of the nature and complexity of the proceedings.[5]
[5] r 683(3)
There is a presumption in the favour of a Magistrate fixing costs of proceedings and it is only when a case falls into an exceptional category because of its nature and complexity that there might be an order for assessment of costs.[6]
[6]Peter Carter Transport Pty Ltd and Anor v Swansaway No. 2 Pty Ltd [2021] QDC 109, para 46.
The defendant has sought to quantify its costs, to be fixed under r 683, on the presumption of successfully obtaining an order that the costs would be assessed on an indemnity basis.
The defendant’s material does not assist in quantifying or fixing the costs of the proceedings, as has been determined by these reasons, on a standard basis.
In those circumstances and having regard to the very significant of material sought to be relied on by the defendant in quantifying the costs to fix them, I find that the present circumstances fall within the category contemplated by r 683 (3) such that because of the nature and complexity of the proceeding, the costs ought be assessed by a Cost Assessor.
I order: -
(1) The plaintiff pay the defendant’s costs of the proceedings to be assessed on a standard basis.
(2) The defendant’s standard costs be assessed by a Cost Assessor.
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