Descon Group Australia Pty Ltd v 35 Merivale Pty Ltd (No 2) [2024] QSC 323

SUPREME COURT OF QUEENSLAND CITATION: Descon Group Australia Pty Ltd v 35 Merivale Pty Ltd (No 2) [2024] QSC 323 PARTIES: DESCON GROUP AUSTRALIA PTY LTD ACN 625 771 075 (applicant) v 35 MERIVALE PTY LTD ACN 167 068 804 (respondent) FILE NO: 12325 of 2023 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 18 December 2024 DELIVERED AT: Brisbane HEARING DATE: Determined without oral argument pursuant to orders made on 1 December 2023. JUDGE: Davis J ORDER: That the applicant pay the respondent’s costs of the application on the standard basis. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE – COSTS FOLLOWS EVENT – INDEMNITY COSTS – where the applicant and respondent were parties to building contracts – where the applicant had posted security for its obligations – where the respondent called on the security – where the applicant sought an injunction preventing the respondent from calling on the security – where the application for injunction failed – where the respondent sought costs – where the respondent sought costs on an indemnity basis Uniform Civil Procedure Rules 1999 (Qld), r 681 Bucknell v Robins [2004] QCA 474, cited Descon Group Australia Pty Ltd v 35 Merivale Pty Ltd [2023] QSC 276, related Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, cited SOLICITORS: Kanther Law for the applicant CDI Lawyers for the respondent -- 1 of 4 -- 2 [1] The applicant, Descon Group Australia Pty Ltd (Descon), filed an application seeking various relief, but ultimately pressed for: (i) an interlocutory injunction restraining the respondent, 35 Merivale Pty Ltd (Merivale), from calling upon insurance bonds held pursuant to contracts between them; or alternatively (ii) a freezing order to similar effect. [2] Upon the usual undertaking as to damages, an interlocutory injunction was granted in favour of the applicant on 3 October 2023. That injunction was extended on each of 5 October, 23 October and 26 October. Full argument was heard on 26 October 2023. [3] On 1 December 2023, the following orders were made: “1. The injunctions made on 3 October 2023 and extended on each of 5 October, 23 October and 26 October 2023, are dissolved. 2. The matter proceed as if started by claim. 3. The application is otherwise dismissed. 4. The parties exchange written submissions on costs by 4.00 pm on 15 December 2023. 5. In the absence of any application being filed by 4.00 pm on 22 December 2023 seeking leave to make oral submissions on costs, the question of costs will be decided without further oral hearing.” [4] The respondent filed and served its submissions on costs. The applicant did not file submissions. The respondent sought costs on an indemnity basis. No parties sought to make oral submissions on costs. Consideration [5] Two questions arose, namely: (i) should the unsuccessful applicant pay the respondent’s costs of the application? (ii) if so, should it pay them on the standard or indemnity basis? Should the applicant pay the respondent’s costs? [6] The usual rule is that costs follow the event unless there is some reason to order otherwise.1 [7] There is no reason here to depart from the usual rule and the applicant should pay the respondent’s costs. 1 Uniform Civil Procedure Rules 1999, r 681; and see Oshlack v Richmond River Council (1998) 193 CLR 72 at [67]-[69]; and Bucknell v Robins [2004] QCA 474 at [17]. -- 2 of 4 -- 3 Should the costs be assessed on the indemnity basis? [8] The respondent points to four reasons why it submits an award of indemnity costs is justified. They are: (i) “the Applicant’s conduct resulted in the initial interlocutory application being extended at an interim hearing on 5 October 2023, further unreasonably delaying the Respondent’s contractual right to access the insurance bonds” (the first reason); (ii) “the case pursued by the Applicant was, in every sense, hopeless” (the second reason); (iii) “the Applicant made serious allegations of unconscionable conduct which it had no reasonable basis for making” (the third reason); and (iv) a Calderbank offer was not accepted (the fourth reason). [9] The first reason ought to be rejected. The applicant put its case and the fact that the respondent was delayed in enforcing its rights was just a consequence. [10] I disagree that the applicant’s case was relevantly “in every sense, hopeless” (the second reason). The parties initially entered into a contract dated 22 November 2021 (the building contract). That was varied on 5 July 2023 by a deed styled “Supplemental Building Multiparty Deed”. That was not the first variation. In February 2022, the parties had entered into another “multiparty deed”, but that was not before me on the application. A further deed styled “Akin Residences – Second Side Deed” was entered into on 5 July 2023. These agreements raise considerable questions of construction and were the subject of extensive argument. They were certainly not without their difficulties, as the reasons for ultimately dismissing the application demonstrate.2 [11] As to the third reason, it is true that the applicant raised questions of unconscionable conduct. However, Mr Cooke of counsel who appeared for Descon accepted that the case really turned on the construction of the various contractual documents.3 As I have already observed, the effect of those agreements was open to legitimate argument. [12] A Calderbank offer was made (the fourth reason) by letter from the respondent’s lawyers to the applicant’s. In that letter the respondent’s solicitors pointed out the weaknesses in the applicant’s case and then offered to compromise on the basis that the applicant capitulate and discontinue its proceedings, allowing the respondent to call upon the security. The compromise which was offered was that the respondent would bear its own costs. [13] The Calderbank letter was sent at 6.31 pm on 19 October 2023 and was to expire at 4 pm on 20 October 2023. [14] The sending of a letter well after office hours, where the offer made therein is to expire before the end of the next business day, makes the letter appear more to be a device to create a claim for indemnity costs than a genuine attempt to settle the 2 Descon Group Australia Pty Ltd v 35 Merivale Pty Ltd [2023] QSC 276. 3 Descon Group Australia Pty Ltd v 35 Merivale Pty Ltd [2023] QSC 276 at [32]. -- 3 of 4 -- 4 dispute. However, it is unnecessary to determine that issue. Given the complicated nature of the issues between the parties and the very short timeframe given to accept the Calderbank offer, the failure to do so does not justify an indemnity costs order. [15] In all the circumstances, insufficient reason has been demonstrated to depart from the course that the unsuccessful applicant pay the respondent’s costs on the standard basis. Orders [16] It is ordered that: 1. The applicant pay the respondent’s costs of the application on the standard basis. -- 4 of 4 --