Arete Real Estate Pty Ltd v realT Properties Pty Ltd [No 2] [2025] QCA 179

SUPREME COURT OF QUEENSLAND CITATION: Arete Real Estate Pty Ltd v realT Properties Pty Ltd [No 2] [2025] QCA 179 PARTIES: ARETE REAL ESTATE PTY LTD (first appellant) KAREN LEANNE McDONALD (second appellant) v REALT PROPERTIES PTY LTD (respondent) FILE NO/S: Appeal No 16278 of 2024 DC No 2691 of 2023 DIVISION: Court of Appeal PROCEEDING: Further Orders – Costs ORIGINATING COURT: District Court at Brisbane – [2024] QDC 180 (Kent KC DCJ) DELIVERED ON: 23 September 2025 DELIVERED AT: Brisbane HEARING DATE: Heard on the papers JUDGES: Mullins P, Bradley JA and Callaghan J ORDERS: 1. The appellants must pay the respondent interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld) of $3,727.34 calculated on the damages assessed as at 26 August 2024 of $104,678 from 26 August 2024 to 28 January 2025. 2. The appellants must pay two-thirds of the respondent’s costs of the District Court proceeding to be assessed on the District Court scale on the standard basis. 3. The respondent must pay the appellants’ costs of the appeal to and including 12 February 2025 and thereafter each party must bear its own costs of the appeal. 4. The sum of $233,124.13 and accretions held by the respondent pursuant to the order made on 9 January 2025 in the District Court proceeding (the 9 January order) must be distributed as follows: (a) $108,405.34 to the respondent; (b) $124,718.79 to the appellants; -- 1 of 9 -- 2 (c) the accretions on the sum of $233,124.13 in the proportions to which the respondent and the appellants are respectively entitled to that sum as set out in sub-paragraphs (a) and (b). 5. Upon the payments made by the respondent in accordance with the preceding paragraph of this order, the respondent and Mr Jason Martin Dunn and Ms Nicole Yula Dunn are released from the undertakings recorded in the 9 January order. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL MATTERS – where the appellants were successful in their appeal from the District Court – where the respondent made two offers to settle in July which were for the purpose of part 5 of chapter 9 of the Uniform Civil Procedure Rules 1999 (Qld) – where the outcome of the appeal was more favourable to the respondent than either of the offers made in July – where the appellants argued that a point which was conceded by the respondent on appeal extended the time of the trial and contributed to the error of the primary judge – where the respondent submitted one-third of their costs should not be recoverable to reflect the time spent on the conceded issue – whether r 360(2) UCPR should be applied to the costs from the District Court proceeding – whether another order as to costs is appropriate in the circumstances PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW EVENT – GENERAL PRINCIPLES AND EXERCISE OF DISCRETION – where the appellants were successful in their appeal from the District Court – where the respondent initially submitted on appeal that the proper assessment of damages, including the point in time from which damages should be assessed and what adjustments should be made, would require evidence to be adduced and should be remitted to the trial judge – where on the hearing of the appeal the parties agreed on figures for damages for two dates and requested the Court of Appeal choose between those dates – where the respondent submitted the “event” for the purpose of applying the usual rule in r 681 of the Uniform Civil Procedure Rules 1999 (Qld) was the contested issues the respondent was successful on – whether the order for costs of the appeal submitted by the respondent was appropriate in the circumstances – whether another order as to the costs of the appeal is appropriate in the circumstances PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INTEREST ON COSTS – where the appellants were unsuccessful at trial and filed an appeal – where the appellants applied to the District Court for a stay of the judgment pending appeal – where the order was -- 2 of 9 -- 3 made by consent in the District Court that the judgment amount would be paid into an interest bearing bank account in the name of the respondent upon undertakings being given by the respondent and its directors – where the respondent argued on appeal it should receive the interest from 26 August 2024 to the date of the judgment on the appeal of 25 July 2025 – whether the proposed order by the respondent as to the interest is appropriate in the circumstances Uniform Civil Procedure Rules 1999 (Qld), r 360, r 681, r 766 Speets Investment Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39, cited COUNSEL: L M Copley, with S L Philippou, for the appellants M P Jones KC, with C D Martin, for the respondent SOLICITORS: McCarthy Durie Lawyers for the appellants Law Shared Pty Ltd for the respondent [1] THE COURT: The appellants were successful on their appeal to this Court and, in lieu of order 2 made by the trial judge on 9 December 2024, the appellants were ordered to pay the respondent damages for breach of contract assessed as at 26 August 2024 in the sum of $104,678: Arete Real Estate Pty Ltd v realT Properties Pty Ltd [2025] QCA 133 (the reasons). [2] The parties have filed written submissions on costs and interest. The question of the calculation of the interest to be paid on the damages awarded to the respondent and the costs of the proceeding in the District Court and on the appeal must now be determined. Matters relevant to the calculation of interest and the awarding of costs [3] The terms of the order made by the consent of the parties in the District Court on 9 January 2025 were noted at [6] of the reasons. [4] The respondent’s written submissions were accompanied by an affidavit of Mr Taylor of the respondent’s solicitors affirmed on 8 August 2025 who deposed to offers to settle which had passed between the parties. Errors in that affidavit were corrected by a supplementary affidavit of Mr Taylor filed on 22 August 2025. [5] The respondent’s first offer to settle was served on 5 July 2024 and was on the following terms: “a. The defendants pay the plaintiff $75,000 and retain the deposit. b. The plaintiff discontinues its claims in the proceeding against the defendants. c. The defendants discontinue their claims in the proceeding against the plaintiff. d. The parties are to bear their own costs of and incidental to the proceeding.” -- 3 of 9 -- 4 [6] That offer which would have resulted in the respondent receiving $103,757.40 was rejected by the appellants who made a counteroffer on 11 July 2024: “1. Within 2 business days of written acceptance of this offer, the First Defendant shall: a. authorise the Plaintiff’s former solicitor to release the deposit of $28,757.40 (“Deposit”) to the Plaintiff, without deduction; and b. pay a further twenty thousand dollars ($20,000.00) to the Plaintiff’s nominated account. 2. Each party will bear their own costs, and no interest will be claimed in respect to the Deposit. 3. The Plaintiff shall, within 7 days of receipt of the Deposit, cause a notice of discontinuance, signed by the Defendants, to be executed and filed. 4. Each party shall provide mutual releases to the other party for all claims relating to or arising from the matters subject to these proceedings.” [7] The counteroffer lapsed on 25 July 2024. [8] The respondent served on the appellants’ solicitors on 23 July 2024 another offer to settle: “1. Within 7 business days of written acceptance of this offer, the defendants are to: a. authorise the plaintiff’s former solicitor to release the deposit of $28,757.40 to the plaintiff, without deduction; b. pay to the plaintiff a further $62,000. 2. The plaintiff is to discontinue its claims in the proceeding against the defendants. 3. The defendants are to discontinue their claims in the proceeding against the plaintiff. 4. The parties are to bear their own costs of and incidental to the proceeding. 5. The defendants are to reimburse the plaintiff the $50,000 which the plaintiff paid as security for the costs of this proceeding.” [9] That offer which would have resulted in the respondent receiving $90,757.40 was also rejected by the appellants. Both the 5 July and 23 July offers were open for acceptance for 14 days and were therefore offers for the purpose of part 5 of chapter 9 of the Uniform Civil Procedure Rules 1999 (Qld). The respondent made another offer to settle served on the appellants’ solicitors on 23 August 2024 on the eve of the commencement of the trial that was open for acceptance until 5.00 pm on 25 August 2024: -- 4 of 9 -- 5 “1. Within 7 business days of written acceptance of this offer, the defendants are to: a. authorise the plaintiff’s former solicitor to release the deposit of $28,757.40 to the plaintiff, without deduction; b. pay to the plaintiff a further $42,000. 2. The plaintiff is to discontinue its claims in the proceeding against the defendants. 3. The defendants are to discontinue their claims in the proceeding against the plaintiff. 4. The parties are to bear their own costs of and incidental to the proceeding. 5. The defendants are to reimburse the plaintiff the $50,000 which the plaintiff paid as security for the costs of this proceeding.” [10] That offer which was not an offer of the purpose of part 5 of chapter 9 of the UCPR was not accepted and lapsed before the trial commenced on 26 August 2024. [11] The appellants accept that the outcome for the respondent after the appeal of a judgment for damages in the sum of $104,678 is more favourable to the respondent than either of the July offers. In accordance with r 360(2) of the UCPR, unless the appellants show another order for costs is appropriate in the circumstances, the Court must order the appellants to pay the respondent’s costs of the proceeding in the District Court calculated on the standard basis up to and including the date of service of the offer and thereafter on the indemnity basis. The appellants seek to show that another order for costs is appropriate in the circumstances. The appellants point to the amendments made to the statement of claim on 18 June 2024 (referred to at [2] of the reasons) as complicating the ensuing trial and resulting in a further day of submissions (21 October 2024) and contributing to the errors made by the trial judge. The appellants also note that by the amended statement of claim filed on 18 June 2024 the respondent pleaded that 16 appointments had been revoked by 27 December 2023 but those properties were not particularised until 14 July 2024. This meant the lost value could not be quantified by the appellants. [12] The respondent concedes that some time at the trial was occupied by the issue of the assignment of the appointments asserted by the respondent which was ultimately conceded by the respondent for the purpose of the appeal. The respondent submits that, based on the transcript, roughly one-third of the trial was occupied by that issue. The respondent therefore accepts that it would be just, in the circumstances, to reduce the respondent’s recovery of costs for the trial by one-third so that the appellants do not pay the respondent’s costs of that issue. Parties’ submissions on the costs of the proceeding in the District Court [13] The appellants submit that as the respondent ultimately elected to forego its claim for specific performance and the judgment which the respondent ultimately obtained for damages is within the jurisdiction of the Magistrates Court, the costs awarded for the District Court proceeding ought to be under the Magistrates Court scale. The appellants are also seeking a costs order in their favour on the basis that the outcome -- 5 of 9 -- 6 of the appeal meant they partially successfully defended the litigation in the District Court. The appellants therefore seek the following costs orders: (a) the appellants pay the respondent’s costs of the District Court proceeding up to 18 June 2024 on the standard basis on the Magistrates Court scale; (b) the respondent pay the appellants’ costs of the District Court proceeding from 19 June 2024 on the standard basis on the District Court scale. [14] The respondent submits the appellants should pay two-thirds of the respondent’s costs calculated on the standard basis up to and including 5 July 2024 and calculated on the indemnity basis after 5 July 2024. What order should be made for costs of the District Court proceeding? [15] As the parties’ submissions on costs highlight, both parties made decisions in the course of the proceeding that did not serve them well. That is also reflected by the observations made at [23] of the reasons. The concession the respondent makes that it should not recover its costs for one-third of the trial that was occupied by the misconceived issue pursued by the respondent of the assignment of the appointments is appropriate but does not go far enough. It only relieves the appellants of paying the respondent’s costs of that issue but the appellants also incurred costs in defending a trial that was longer than necessary. The appellants should be given some relief in the operation of the usual costs order that applies under r 360(2) of the UCPR in addition to not having to pay one-third of the respondent’s costs for the trial. The trial took place while the respondent was still seeking specific performance which could not be sought in the Magistrates Court. The order for costs in favour of the respondent should therefore be on the District Court scale. The appellants’ complaint about the lack of particulars of the revoked appointments until 14 July 2024 is not relevant in determining the costs of the proceeding because of the appellants’ attitude to compromise at that time reflected by their very modest offer to settle dated 11 July 2024. Taking into account that the appellants had the opportunity from the 5 July offer to settle the proceeding for an amount slightly less than the respondent ultimately recovered for an award for damages, the concession made by the respondent, and that some further mitigation of the operation of r 360(2) should be given to the appellants on account of the additional costs incurred by the appellants due to the unnecessary issue pursued by the respondent of the assignment of the appointments, the appropriate costs order is that the appellants pay two-thirds of the respondent’s costs of the District Court proceeding to be assessed on the standard basis. Parties’ submissions on the costs of the appeal [16] As noted in the reasons (at [6]), the respondent conceded grounds 1(b), (c) and (d) in the outline of argument filed on 12 February 2025 for the purpose of the appeal. That meant, as set out in the reasons (at [10]), that what remained in issue between the parties was limited to grounds 1(a) and (e) and 2. As grounds 1(e) and 2 depended on ground 1(a), the outcome of the appeal was largely determined by the finding of this Court (at [20]) that the appellants did not succeed on ground 1(a). [17] There was an additional matter, however, that is relevant to the determination of the costs of the appeal. As recorded (at [9] of the reasons), the respondent in its written outline for the appeal had submitted that the proper assessment of damages, including -- 6 of 9 -- 7 the point in time when damages should be assessed and what adjustment should be made for income received and expenses incurred in respect of the relevant appointments, would require evidence to be adduced and should be remitted to the trial judge for determination. It was not until the commencement of the hearing of the appeal that the parties for practical reasons agreed on figures for damages for two dates and requested this Court to choose which of those dates was the appropriate date for the assessment of damages payable by the appellants. Ultimately this Court found that the amount of the damages was $104,678 on the basis the damages for breach of contract should be assessed as at 26 August 2024. [18] The respondent relies on paragraph 26 of its outline dated 12 February 2025 which stated: “If the Appellants continue to press grounds 1(a), 1(e) and 2 of the notice of appeal, the Respondent will seek its costs of the appeal, either from the date of this outline or save for an allowance for the proper preparation by the Appellants of a notice of appeal and an outline of argument on the grounds which the Respondent now concedes.” [19] On the basis of paragraph 26, the respondent submits that the result of the appeal was that the respondent succeeded on every issue which was contested and that therefore the appellants should pay the respondent’s costs of the appeal from 12 February 2025 on the standard basis. That submission, however, overlooks that until the morning of the appeal hearing, the respondent was seeking that if the appeal were allowed the matter should be remitted to the trial judge for the assessment of the damages. What order should be made for the costs of the appeal? [20] The result of the appeal was that the judgment after trial of $233,124.13 for debt and interest was substituted by a judgment on appeal for $104,678 for damages (before interest). The appellants succeeded on the appeal. The appellants seek an order that the respondent pay the appellants’ costs of the appeal on the standard basis. [21] The respondent submits that it was successful on the three grounds that remained outstanding after the concessions were made in its outline filed on 12 February 2025. It submits that it had success on the contested issues on the appeal and that was the “event” for the purpose of applying the usual rule under r 681 of the UCPR that costs follow the event. The respondent relies on Speets Investment Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39 at [11] and [13]. The respondent therefore seeks a costs order that the appellants pay the respondent’s costs of the appeal from 12 February 2025 onwards. [22] The order for costs on the appeal should be the order that is appropriate in the circumstances: r 766(1)(d) of the UCPR. Although the starting point is usually that provided for in r 681 that costs follow the event, as the analysis in Speets at [13]-[17] shows, the circumstances of a particular case may call for a different approach to costs. [23] Despite the respondent’s concessions in the outline filed on 12 February 2025, the respondent was seeking an outcome on the appeal that would have prolonged the litigation by having the matter remitted to the District Court for further evidence and the assessment of the damages. That remained the position until the day of the hearing of the appeal. The appellants in paragraph 5 of their reply submissions opposed the -- 7 of 9 -- 8 remission of the proceeding to the trial judge for rehearing or the assessment of damages and submitted that the respondent should be held to its election to run its case in the manner in which it did before the trial judge. That issue of the assessment of damages and the possibility of the matter being remitted to the District Court remained in contention until the day of the appeal (in addition to grounds 1(a) and (e) and 2) by which time the costs of the appeal had been incurred by the appellants. In those circumstances, the respondent should pay the appellants’ costs of the appeal to and including 12 February 2025 and thereafter each party should bear its own costs of the appeal. Interest [24] The parties also differ on how interest should be dealt with. In accordance with the order made in the District Court proceeding on 9 January 2025 (referred to at [6] of the reasons), the appellants paid $233,124.13 which was the then judgment amount calculated to 9 December 2024 to an interest bearing bank account in the name of the respondent on or about 28 January 2025 upon the undertakings given by the respondent and its directors that were recorded in that order. Despite the respondent now seeking interest on the sum of $104,678 pursuant to s 58 of the Civil Proceedings Act 2011 (Qld) from 26 August 2024 to 25 July 2025, it is not appropriate for such interest to be claimed in that manner when the appellants paid $233,124.13 into an account in the respondent’s name on the terms of the 9 January order. Interest under s 58 only needs to be calculated from 26 August 2024 to 28 January 2025 and otherwise the interest earned on the account can be divided between the parties according to their respective entitlements to the proceeds. [25] The respondent had sought an order that the interest in the account be dealt with by being retained by the respondent and set off against amounts owed by the appellants to the respondent for costs. As the costs order proposed by the Court are not all in favour of the respondent, it is not appropriate to provide for the retention sought by the respondent. Orders [26] The orders which should be made are: 1. The appellants must pay the respondent interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld) of $3,727.34 calculated on the damages assessed as at 26 August 2024 of $104,678 from 26 August 2024 to 28 January 2025. 2. The appellants must pay two-thirds of the respondent’s costs of the District Court proceeding to be assessed on the District Court scale on the standard basis. 3. The respondent must pay the appellants’ costs of the appeal to and including 12 February 2025 and thereafter each party must bear its own costs of the appeal. 4. The sum of $233,124.13 and accretions held by the respondent pursuant to the order made on 9 January 2025 in the District Court proceeding (the 9 January order) must be distributed as follows: a. $108,405.34 to the respondent; -- 8 of 9 -- 9 b. $124,718.79 to the appellants; c. the accretions on the sum of $233,124.13 in the proportions to which the respondent and the appellants are respectively entitled to that sum as set out in sub-paragraphs (a) and (b). 5. Upon the payments made by the respondent in accordance with the preceding paragraph of this order, the respondent and Mr Jason Martin Dunn and Ms Nicole Yula Dunn are released from the undertakings recorded in the 9 January order. -- 9 of 9 --