Robinson & Ors v Dairy Brokers Australia Pty Ltd & Ors (No. 2)

[2016] QDC 149

DISTRICT COURT OF QUEENSLAND

CITATION:

Robinson & Ors v Dairy Brokers Australia Pty Ltd & Ors (No. 2)[2016] QDC 149

PARTIES:

CYRIL ALAN ROBINSON, THELMA JEAN ROBINSON and DALE McGREGOR ROBINSON trading as CA, TJ & DM ROBINSON (a firm)

(plaintiffs)

v

DAIRY BROKERS AUSTRALIA PTY LTD

(ACN 107 781 019)

(first defendant)

and

TREVOR GLEESON

(second defendant)

and

ANTHONY LUCK

(third defendant)

FILE NO/S:

KING-DIS-15/2011

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

21 June 2016

DELIVERED AT:

Brisbane

HEARING DATE:

25 May 2016

JUDGE:

Reid DCJ

ORDER:

The plaintiffs’ pay the first, second and third defendants’ costs of the action, to be assessed up till 17 September 2013 on a standard basis and thereafter on an indemnity basis

CATCHWORDS:

APPLICATION FOR COSTS OF ACTION – Inherent improbability of plaintiff’s case – resolution of issues of credit – relevance to a ward of indemnity costs

Uniform Civil Procedure Rules 1999, r 365

Calderbank v Calderbank [1976] Fam 93, considered

Reeves v O’ Riley [2013] QCA 285, followed

Colgate Palmolive Co & Anor v Cussons Pty Ltd [1993] 46 FCR 22, considered

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, considered

J-Corp Pty Ltd v Australian Builders Labours Federation Union of Workers (WA Branch) (No.2) (1993) 46 IR 301, considered

Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court, 3 May 1991), considered

COUNSEL:

T.G. Lambert for the plaintiffs

D. Favell for the first and second defendants

B. Kent for the third defendant

SOLICITORS:

Turnbull Mylne for the plaintiffs

Emerson Legal for the first and second defendants

Munro Legal for the third defendant

1. After the trial of this matter I gave judgment for the defendants (See Robinson & Ors v Dairy Brokers Australian Pty Ltd & Ors [2016] QDC 148). Both defence counsel submitted their clients should be awarded costs on the indemnity basis. They have since provided written submissions in support of an application that the plaintiffs pay the defendants’ costs of the action on an indemnity basis, or at least partly on an indemnity basis. The plaintiffs’ counsel has prepared written submissions opposing such an order but agreeing that costs should be awarded, but on the usual basis.

1. The first and second defendants submit that on 6 November 2015 their solicitor made an offer under Chapter 9 part 5 Uniform Civil Procedure Rules 1999 (UCPR) to settle the action for $5,000 inclusive of costs.  That offer was not accepted.

1. Because the plaintiff failed to obtain a judgment of any kind, the provisions of r 365 of UCPR do not apply but counsel for the first and second defendants submits that the offer should be assessed having regard to the principles enunciated in Calderbank v Calderbank [1976] Fam 93. He accepts that the power to so award costs is discretionary. In support of his submission that I should do so, counsel refers to a number of features of the case. In particular he relies on the following facts:

1.          The plaintiffs were wholly unsuccessful with their claim;

2.          My assessment of the honesty and reliability of the evidence of the second defendant;

3.          That a letter of Mrs Parkes to the plaintiffs’ solicitors of 17 September 2013 referred to paragraph 57 of my judgment ought to have alerted the plaintiffs and their solicitors to the obvious weakness in their case.

4.          Full disclosure of the records of the third defendant’s supply of milk to Parmalat ought to have also alerted the plaintiffs and their solicitors to the fact that the dairy herd, largely sold by the third defendant, did indeed produce 1,600 L of milk per pick up, as the plaintiff asserted had been represented to them.  Consequently they ought to have realised that their allegation of misrepresentation was misplaced. Those records were provided to the plaintiffs’ solicitors on 15 August 2013.

1. Counsel for the first and second defendants submits that well before trial the plaintiffs should have been aware they could not succeed.  He submits that certainly after the records of Parmalat and the letter of Mrs Parkes had been received the plaintiffs and their solicitors were in a position where they should readily have assessed the weakness of their case.   

1. He submitted that I should order that the plaintiffs pay the first and second defendants’ costs assessed on a standard basis up to 17 September 2013 (in error in his submissions, said to be 17 November 2013) and thereafter on an indemnity basis.               

1. Counsel for the third defendant submits that the force of my judgment is such that the plaintiffs ought to pay the costs of the third defendant on an indemnity basis for the whole of the action.  He relied on the fact that:

1.          The plaintiff failed to succeed on any issue at the trial;

2.          The substance of the plaintiffs’ case alleged fraud against the second defendant “although not pleaded ….as such”.

3.          The plaintiffs’ proceeding showed a “reckless disregard for the truth” and cannot be seen as mere “unreliability or uncertainty as to the facts”;

4.          The weakness of the plaintiffs’ case became even more apparent after receipt of Mrs Parkes letter earlier referred to.

1. Whilst acknowledging that an award of costs on an indemnity basis is exceptional, he submitted that the plaintiffs’ conduct of the case was so unreasonable as to justify departure from the general rule.  He submitted that the plaintiffs’ case was groundless.

1. The plaintiffs’ counsel, in submissions opposing any order for payment of costs on an indemnity basis, submitted that in the plaintiffs’ case “there is nothing which suggests any inimical conduct on the part of the Plaintiffs which would attract assessment of costs of the proceeding on an indemnity basis”.  He emphasized that costs are not to be awarded to punish an unsuccessful party, but to compensate the successful party against expense reasonably incurred.

1. He also submitted;

“It may have been a reasonable decision for the plaintiffs to have accepted the Offer.  However, the Offer was for a very low sum; a derisory sum when compared to the amount of the Plaintiffs’ claimed.  This suggests that the Offer was made to the Plaintiffs in the substantial belief that the Plaintiffs would reject it out of hand.  In other words it was not a serious offer which the 1^st and 2^nd defendants ever believed would be accepted.  As such, it was not intended to influence the future course of the proceedings”.

1. In Reeves v O’ Riley [2013] QCA 285, the Court said, at paragraph 4, that the following factors were relevant to a consideration of whether the rejection of an offer characterised as a Calderbank offer was unreasonable:

(a)        The stage of the proceedings at which the offer was received;

(b)        The time allowed 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 of the terms of the offer;

(f)         Whether the offer foreshadowed an application for indemnity costs if it was rejected.

Whilst that offer was made fairly late in the proceedings and well after – as I shall later indicate – the plaintiffs ought to have realised their case was a hopeless case, I agree that the offer was not made with the expectation that it might be accepted.

1. I do not think it was a real attempt to resolve the dispute. It did not involve any significant compromise of the first and second defendants’ position. In my view it was made primarily to underpin the submission now made, in the event that the defendants eventually won at trial and not in a genuine attempt to resolve the dispute.  I do not think that the issue for my determination is to be resolved by finding the plaintiff acted unreasonably in refusing to accept that offer.

1. In my view the real issue is whether the plaintiffs were so unreasonable in bringing or maintaining the action, particularly after disclosure of material obtained from the third defendant about his milk supply to Parmalat, and the provision of the letter of Mrs Parkes referred to in my judgment, that indemnity costs should be awarded.

1. Whilst, as the plaintiffs’ counsel submits, the proceeding was a “fact rich” case and its determination rested on resolution of issues of credit, there are nevertheless in my view a number of unusual features of the case which are important in consideration of the issue I have to now determine.

1. Particular features of the case that support the view that it was unreasonable to have continued the proceedings include:

1.          The fact that Dale Robinson and Mr Robinson must both have known that they had in fact inspected the third defendant’s dairy herd, as I found occurred, yet gave evidence that I found to be wrong, that they saw no milk producing or lactating cows on his property.  So too the evidence that they were required cows with no horns was inconsistent with the fact that significant number of cows they inspected must have had horns.  As I have indicated in my judgment, their evidence to the contrary was so inherently improbable that their lawyers ought to have advised them of that well prior to trial. It was a feature of the case that appeared obvious to me from the time of the opening of the evidence by the plaintiffs’ counsel;

2.          Both Dale Robinson and Mr Robinson must have known that Dale Robinson and Mr Luck did not both sign a blank pro forma contract, as was found by me.  Again the assertion that they did was inherently probably, a fact obvious to me from the time of the opening of the plaintiffs’ evidence at the trial, and ought to have been obvious to their solicitors;

3.          So too the assertion that the date of delivery of the cattle was delayed at the request of Mr Luck is inherently improbable and ought, in combination with the other improbable features, have alerted the plaintiffs’ lawyers to real issues about the credibility of their clients’ case.

4.          The risks associated with the plaintiff’s case ought to have been further highlighted by the provision of Mr Luck’s Parmalat records on 15 August 2013 which clearly showed the herd was producing 1,600 L per pick up in 2009, immediately before delivery of the cows to the plaintiffs.

5.          The letter of Mrs Parkes of 17 September 2013 ought to have made the plaintiffs and their solicitors further aware of the very significant risks associated with prosecution of the case, in circumstances where, as I have previously said, the foundation of the case was inherently improbable;

1. In such circumstances it seems to me that the plaintiffs and their lawyers ought to have appreciated that the real cause of the diminution in milk supplied by the cows was related to their management of the herd and issues associated with their dislocation, when moved to the plaintiffs’ property and not a result of any misconduct or misrepresentation by any of the defendants.

1. The question then to be determined is whether such matters cause me to conclude indemnity costs should be awarded, and if so, from when.

1. The oft cited judgment of Sheppard J in Colgate Palmolive Co & Anor v Cussons Pty Ltd [1993] 46 FCR 225 deals with the circumstances in which a court may exercise the power to award indemnity costs. It is clear from that case that there must usually be some special or unusual feature of the case to justify a court exercising its discretion to award indemnity costs. At p 231 His Honour cited with approval the following statement of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397;

“I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success.  In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law.” 

1. That approach had been accepted, as referred to in his Honour’s judgment, by French J in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court, 3 May 1991).

1. French J in J-Corp Pty Ltd v Australian Builders Labours Federation Union of Workers (WA Branch) (No.2) (1993) 46 IR 301 also said in relation to the issue of indemnity costs;

“… it is not a necessary condition of the power to award such costs that a collateral purpose or some species of fraud be established.  It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reasons, a party persists in what should on proper consideration be seen to be a hopeless case”.

1. As I endeavoured to illustrate in my judgment, there are in my view significant features of this case which ought have indicated to the plaintiffs, on proper consideration of their case and if properly advised, that this was a case that should have been considered hopeless. Certainly after receipt of the letter of Mrs Parkes and receipt of the third defendant’s Parmalat records that ought to have been apparent. 

1. Acknowledging that an award of indemnity costs is, unusual, I nevertheless conclude that after the receipt of that documentation the plaintiffs’ case ought to have been seen to be hopeless. 

1. In the circumstances I will make an order that the plaintiffs’ pay the first, second and third defendants’ costs of the action, to be assessed up till 17 September 2013 on a standard basis and thereafter on an indemnity basis.