Vision Eye Institute Ltd v Kitchen (No 3)

Case [2015] QSC 164

SUPREME COURT OF QUEENSLAND

CITATION:

Vision Eye Institute Ltd & Anor v Kitchen & Anor (No 3) [2015] QSC 164

PARTIES:

VISION EYE INSTITUTE LTD
(first plaintiff)
and
ICON LASER (AUSTRALIA) PTY LTD
(second plaintiff)
v
DR DAVID KITCHEN and MICHELLE KITCHEN (in their personal capacity and in their capacity as Trustees of the MDK Trust)

(defendants)

FILE NO/S:

10366 of 2009

DIVISION:

Trial Division

PROCEEDING:

Claim

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

 17 June 2015

DELIVERED AT:

Brisbane

HEARING DATE:

Written submissions 1, 10 and 11 June 2015

JUDGE:

Applegarth J

ORDER:

1.    The defendants pay 95 per cent of the plaintiffs’ costs of the principal proceeding and of the counterclaim, including reserved costs, to be assessed on the indemnity basis.

2.    The liability of the second-named defendant, Michelle Kitchen, for such costs is limited to the property of the MDK Trust, including (without limitation) the Restricted Securities held by the defendants in the first-named plaintiff, Vision Eye Institute Ltd.

CATCHWORDS:

PROCEDURE – COSTS – GENERAL RULE – COSTS FOLLOW THE EVENT – COSTS OF WHOLE ACTION – GENERALLY – where the plaintiffs were substantially successful in their claim against the defendants – where the defendants were largely unsuccessful on their counterclaims – whether the costs order in the plaintiffs’ favour should be discounted to reflect the defendants’ partial success

PROCEDURE – COSTS DEPARTING FROM THE GENERAL RULE – ORDER FOR COSTS ON INDEMNITY BASIS – where the defendants failed to accept the plaintiffs’ formal offer to settle made under the UCPR – where the plaintiffs offered to accept $2 million and bear their own costs – where three years later one of the plaintiffs is awarded a judgment of more than $10 million and a cost order is made in the plaintiffs’ favour – where the terms of the offer included that the proceedings would be discontinued in their entirety – where the defendants submit that settlement of the proceedings on the terms of the offer would have permitted the plaintiffs to bring fresh proceedings without leave – whether judgment and orders more favourable to plaintiffs than terms of their offer

Uniform Civil Procedure Rules 1999 (Qld) rr 360(1), 681(1), 684

BHP Coal Pty Ltd and Ors v O & K Orenstein & Koppel AG and Ors (No 2) [2009] QSC 64, followed

Harvey v Attorney-General for the State of Queensland (2011) 220 A Crim R 186; [2011] QCA 256, cited
Mobile Innovations Ltd v Vodafone Pacific Ltd [2003] NSWSC 423, cited
Thiess v TCN Channel Nine Pty Ltd (No 5) [1994] 1 Qd R 156, cited
Todrell Pty Ltd v Finch & Ors [2008] 2 Qd R 95; [2007] QSC 386, cited
Vision Eye Institute Ltd & Anor v Kitchen & Anor [2014] QSC 260, cited
Vision Eye Institute Ltd & Anor v Kitchen & Anor (No 2) [2015] QSC 66, cited

COUNSEL:

S R Cooper for the plaintiffs
S C Russell (solicitor) for the defendants

SOLICITORS:

Clayton…

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Details
AGLC
Vision Eye Institute Ltd v Kitchen (No 3) [2015] QSC 164
Case
[2015] QSC 164
Decision Date

CaseChat Overview and Summary

Vision Eye Institute Ltd, an ophthalmic medical practice, filed a claim against Michelle Kitchen, a former director and shareholder, and her associated entities. The primary dispute centred around allegations of misuse of corporate funds and breach of fiduciary duties. The matter was heard in the Supreme Court of New South Wales. The defendants, in turn, filed counterclaims against the plaintiffs, which were largely unsuccessful. The court was tasked with determining whether the plaintiffs' costs order should be adjusted to reflect the partial success of the defendants on their counterclaims. Additionally, the court had to decide if an order for costs on an indemnity basis was appropriate, given the defendants' failure to accept a formal offer to settle.

The court found that the plaintiffs were substantially successful in their primary claim and largely unsuccessful on their counterclaims. Despite the partial success of the defendants, the court determined that the plaintiffs were entitled to costs on an indemnity basis due to the defendants' failure to accept the plaintiffs' formal offer to settle. This offer included terms that would have led to the discontinuance of the proceedings entirely, and the subsequent judgment awarded to the plaintiffs was more favourable than the terms of the offer. The court concluded that the defendants' failure to accept the offer warranted a costs order on an indemnity basis, rather than simply following the general rule of costs following the event.

In light of the above, the court ordered that the defendants pay 95 per cent of the plaintiffs' costs of the principal proceeding and the counterclaim, including reserved costs, to be assessed on the indemnity basis. The liability of Michelle Kitchen for such costs was limited to the property of the MDK Trust, including the Restricted Securities held by the defendants in Vision Eye Institute Ltd. This comprehensive costs order aimed to reflect the substantial success of the plaintiffs in their primary claim while considering the defendants' partial success on their counterclaims.

Orders

Orders of the court

1. The defendants pay 95 per cent of the plaintiffs’ costs of the principal proceeding and of the counterclaim, including reserved costs, to be assessed on the indemnity basis.

2. The liability of the second-named defendant, Michelle Kitchen, for such costs is limited to the property of the MDK Trust, including (without limitation) the Restricted Securities held by the defendants in the first-named plaintiff, Vision Eye Institute Ltd.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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