Valleyfield P/L v Primac Ltd

[2003] QCA 398

SUPREME COURT OF QUEENSLAND

CITATION:

Valleyfield P/L v Primac Ltd & Anor [2003] QCA 398

PARTIES:

VALLEYFIELD PTY LTD ACN 051 841 279
AS TRUSTEE OF THE PARKER UNIT INVESTMENT TRUST
(plaintiff/respondent)
v
PRIMAC LIMITED ACN 010 023 284
(first defendant)
NETAFIM AUSTRALIA PTY LIMITED
ACN 056 229 755
(second defendant/appellant)

FILE NO/S:

Appeal No 3605 of 2002
SC No 344 of 1999

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal – Further Orders

ORIGINATING COURT:

Supreme Court at Townsville

DELIVERED ON:

Judgment delivered 8 August 2003
Further Orders delivered 12 September 2003

DELIVERED AT:

Brisbane

HEARING DATE:

24 February 2003; 25 February 2003; 26 February 2003

JUDGES:

Williams and Jerrard JJA and Mackenzie J
Judgment of the Court

FURTHER ORDERS:

1.   The orders made on 8 August 2003 stand as follows:

i)           Appeal allowed to the extent of varying the judgment at first instance by deleting the amount of $3,768,276.70 and inserting in lieu thereof $1,754,390.00

ii)         Appeal against the dismissal of the counterclaim dismissed

2.   The following further orders as to costs are made:

i)     Set aside the order of the trial judge that the second defendant pay to the plaintiff its costs of and incidental to the action assessed on an indemnity basis and in lieu thereof order that the second defendant pay to the plaintiff its costs of and incidental to the action assessed on a standard basis

ii)          Order that the respondent pay the appellant’s costs of and incidental to the appeal to be assessed on a standard basis

CATCHWORDS:

APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – INTERFERENCE WITH DISCRETION OF COURT BELOW – PARTICULAR CASE – OTHER MATTERS – COSTS – where judgment given at trial more favourable than plaintiff’s offer to settle – where trial judge ordered second defendant to pay plaintiff’s costs on an indemnity basis – where plaintiff ordered to pay first defendant’s costs – where sum of damages reduced on appeal – where substituted judgment not more favourable than the plaintiff’s offer to settle – where submissions as to costs invited – where agreement that costs should only be on a standard basis – where second defendant submitted the defendants’ joint pre-trial offer was more favourable than the substituted judgment having regard to costs for which the plaintiff is liable – where quantum of costs not agreed or assessed – whether second defendant liable for plaintiff’s costs of the trial

APPEAL AND NEW TRIAL – APPEAL – PRACTICE AND PROCEDURE – QUEENSLAND – POWERS OF COURT – COSTS – where second defendant made offer post-judgment and pre-appeal – where offer more favourable than judgment on appeal – whether plaintiff/respondent liable for second defendant/appellant’s costs of the appeal on an indemnity basis from the date of the offer

Uniform Civil Procedure Rules 1999 (Qld), r 353

Tector v FAI General Insurance Co Ltd [2001] 2 Qd R 46; [2000] QCA 426; Appeal No 7391 of 1999, 8 December 2000, considered

COUNSEL:

H B Fraser QC, with B T Porter, for the appellant
J R Baulch SC, with A J Moon, for the respondent

SOLICITORS:

Clayton Utz for the appellant
Lee Turnbull & Co for the respondent

1. THE COURT:  Following delivery of judgment in this appeal submissions as to costs were invited.  The plaintiff (“Valleyfield”) had offered to settle before trial for $3.5m and costs on the standard basis.  The defendants made a joint pre-trial offer of $1.5m and standard costs.  The learned trial judge awarded damages for negligence in the sum of $3,768,276.70 against the second defendant (“Netafim”) and dismissed Valleyfield’s action in contract against the first defendant (“Primac”). 

1. The learned trial judge ordered Netafim to pay Valleyfield’s indemnity costs of the trial because the judgment was more favourable than Valleyfield’s offer to settle.  Valleyfield was ordered to pay Primac’s costs of the proceedings on a standard basis and was also made ultimately liable for costs of the contribution claim including those for which Primac was liable. 

1. On appeal the sum of damages was reduced to $1,754,390.00.  It is not disputed that, since the order for indemnity costs was based on the original judgment being more favourable to Valleyfield than the joint pre-trial offer to settle, it must be set aside having regard to the outcome of the appeal.  To the extent that the order relates to indemnity costs, an order for costs on the standard basis must be substituted.  Netafim submitted that its offer of $1.5m and standard costs is now more favourable to Valleyfield than the judgment.   The principal basis is that, since both the offer to settle and the judgment on appeal entitle Valleyfield to costs on the standard basis, the adverse costs order against it in respect of Primac has that consequence.  Those costs for which Valleyfield is now liable will, according to Netafim’s estimate of costs involved, exceed the monetary difference between the offer and the damages awarded. 

1. If the monetary effect of costs orders can be relied on to establish such a proposition, it will generally be, except in the clearest of cases, both premature and unsatisfactory to invite the court to make the necessary finding where the quantum of costs has not been agreed or assessed and can only be estimated or speculated about.  In the present instance the quantum of costs falls into the latter categories, and the sums arrived at by the respective parties vary significantly. 

1. While not excluding the possibility that there may be cases where the effect of costs orders may be taken into account to achieve an appropriate costs outcome, in our view, the appropriate conclusion in the present case is that the order in respect of costs of the trial as between Netafim and Valleyfield should be that Netafim should pay Valleyfield’s costs on the standard basis.  

1. With regard to the costs of the appeal, there was an offer made on 20 December 2002 by Netafim to pay $2.3m to Valleyfield together with its standard costs, exclusive of costs liability that Valleyfield may have to Primac.  It was submitted that, since the judgment sum fell short of the offer, Valleyfield should pay the appellant’s costs of the appeal on an indemnity basis from the date of the offer.  It is common ground the second offer is not governed by Ch 9 Pt 4 UCPR 1999 (Qld), notwithstanding the reference to r 353 in the offer itself. Tector v FAI General Insurance Co Ltd [2001] 2 Qd R 463; [2000] QCA 426 supports the proposition that an offer between judgment at the trial and the hearing of the appeal is not governed by r 353. However, the offer may have similar effect to a Calderbank offer.

1. Netafim was successful in substantially reducing damages to a level below the offer to settle, but failed on the issue of liability, which was a major one in the appeal.  However, had Valleyfield accepted the offer to settle, which necessarily implied a concession of liability, it would not have been necessary to proceed with the appeal.  Equally, had Netafim conceded its liability at the hearing, its position with regard to costs would have been more compelling.  In the circumstances an appropriate balance is achieved by an order that Valleyfield pay Netafim’s costs of the appeal on the standard basis.     

1. The orders made on 8 August 2003 as follows:

1.Appeal allowed to the extent of varying the judgment at first instance by deleting the amount of $3,768,276.70 and inserting in lieu thereof $1,754,390.00.

2.Appeal against the dismissal of the counterclaim dismissed. 

should stand.

1. The following further orders as to costs are made:

(i)Set aside the order of the trial judge that the second defendant pay to the plaintiff its costs of and incidental to the action assessed on an indemnity basis and in lieu thereof order that the second defendant pay to the plaintiff its costs of and incidental to the action assessed on a standard basis.

(ii)Order that the respondent pay the appellant’s costs of and incidental to the appeal to be assessed on a standard basis.