Bi Rite Electrical Pty Ltd v R.S.J Daniells Pty Ltd & Ors [2023] QDC 45

DISTRICT COURT OF QUEENSLAND CITATION: Bi Rite Electrical Pty Ltd v R.S.J Daniells Pty Ltd & Ors [2023] QDC 45 PARTIES: BI RITE ELECTRICAL PTY LTD ACN 011 039 571 (Plaintiff) v RSJ DANIELLS PTY LTD ACN 122 313 606 (First Defendant) RUSSELL DANIELLS (Second Defendant) CARMEL KISS (Third Defendant) FILE NO/S: 744/20 DIVISION: Civil PROCEEDING: Trial ORIGINATING COURT: District Court of Queensland DELIVERED ON: 24 March 2023 DELIVERED AT: Brisbane HEARING DATE: On the papers JUDGES: Jarro DCJ ORDER: 1. The third defendant is to pay the plaintiff’s costs, calculated on the standard basis, up to and including 16 May 2022. 2. The plaintiff is to pay the defendant’s costs, calculated on the standard basis, from 17 May 2022. CATCHWORDS: PROCEDURE – COSTS – POWERS OF THE COURT – where the third defendant seeks indemnity costs against the plaintiff – where the plaintiff seeks standard costs against the third defendant – where the plaintiff is entitled to standard costs from the third defendant – where the third defendant is entitled to standard costs from the plaintiff COUNSEL: N J Shaw for the Plaintiff C Upton for the Third Defendant SOLICITORS: MPS Law for the Plaintiff PPCS Lawyers for the Third Defendant -- 1 of 6 -- [1] On 15 December 2022, judgment was entered in favour of the third defendant against the plaintiff on the basis that it was not established by the plaintiff that there was a concluded agreement or guarantee between it and the third defendant.1 The issue of costs remains outstanding. Written submissions have been received by the relevant parties with respect to costs. [2] The third defendant contends that the plaintiff should pay her costs on the indemnity basis. In doing so, reliance has been placed upon a Calderbank offer made shortly before trial and a subsequent formal offer under the Uniform Civil Procedure Rules 1999 (UCPR). Further, it is contended that the circumstances of the case otherwise justify an order for indemnity costs consistent with the authority of Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225. [3] The plaintiff contends that the appropriate order for costs is that the third defendant pay the plaintiff’s standard costs up to and including 16 May 2022 (being the date of the service of the formal UCPR offer) and the plaintiff pay the third defendant’s standard costs from 17 May 2022. For the reasons to follow, I agree with the order contended by the plaintiff. [4] At trial, the plaintiff claimed against the third defendant for a debt owing under a credit agreement for the supply of electrical appliances on credit. It had previously obtained consent judgment against the first and second defendants. The second defendant is the brother to the third defendant who is the director of the first defendant company. [5] The general rule about costs, enunciated in r 681 of the UCPR, is that costs follow the event unless the court orders otherwise. By virtue of r 703, the court may award costs on the indemnity basis if the circumstances of the case warrant the court in departing from the usual course. [6] In support of her position, the third defendant has identified that the circumstances warranting the exercise of the discretion to award indemnity costs include: (a) the making of allegations of fraud knowing them to be false, and the making of irrelevant allegations of fraud; (b) evidence of particular misconduct that causes loss of time to the court and other parties; (c) the fact that proceedings were commenced for some ulterior motive; (d) the fact that the proceedings were commenced in wilful disregard of known facts or clearly established law; (e) the making of allegations that ought never to have been made or the undue prolongation of a case by groundless contentions; (f) an imprudent refusal of an offer to compromise; and, (g) an award for costs on an indemnity basis against the contemnor.2 1 [2022] QDC 284. 2 Mango Boulevard Pty Ltd v Spencer & Ors (No 3) [2013] QSC 94. -- 2 of 6 -- 3 [7] It has also been identified on behalf of the third defendant that the High Court in Stewart v Atco Controls Pty Ltd (in liquidation) [2014] HCA 31, 4 stated: “This Court has a general discretion as to costs. The non-acceptance of a Calderbank offer is a factor, in some cases a strong factor, to be taken into account on an application for indemnity costs. The respondent submits that its rejection of the offer was not unreasonable. If that be the test, it would appear to require at the least that the respondent point to a reason for not accepting the offer beyond the usual prospects of being successful in litigation”. [8] I was also usefully referred by the third defendant to the authority of Hadgelias Holdings and Waight v Seirlis & Ors [2014] QCA 325 as to factors considered to be relevant in deciding whether a party has acted unreasonably in not accepting an offer.3 [9] On 29 April 2022, the third defendant made a Calderbank offer to the plaintiff. The offer was made about six weeks prior to trial and contained the following: (a) within 30 days of the plaintiff and the third defendant entering the deed, the third defendant shall pay the settlement sum (being $2,000) to the plaintiff; (b) the deed “shall contain om addition to the above, among other things, the relevant release, bar to proceedings and boilerplate clauses and so on shall be inserted” into the deed; (c) upon receipt of the settlement sum by the plaintiff and within 14 days of same, the plaintiff and the third defendant must file a notice of discontinuance to discontinue the relevant matter against the third defendant only, for no order as to costs.4 [10] Then less than a month prior to trial, on 16 May 2022, the third defendant made a formal offer in accordance with Chapter 9, Part 5 of the UCPR as follows: (a) the third defendant shall pay the sum of $5,000 (inclusive of $2,000 in costs) to the plaintiff within 21 days of written acceptance of this offer by the plaintiff (the settlement sum); (b) the payment of the settlement sum shall be paid directly to the plaintiff’s solicitor’s trust account in full and final satisfaction of these proceedings, by the plaintiff against the third defendant; (c) upon receipt of the settlement sum and those funds being cleared funds, the plaintiff’s solicitor will, within 14 days, forward a notice of discontinuance to the defendant’s solicitor for signing; and, (d) upon an executed notice of continuance being received by the plaintiff’s solicitor, the plaintiff’s solicitor shall file the notice of discontinuance within seven days of receipt of the signed notice of discontinuance. [11] The third defendant contends that the plaintiff’s rejection of the Calderbank offer was unreasonable; so too was the plaintiff’s rejection of the formal offer. I accept, as the third defendant has submitted, that at all material times she was willing and able to 3 At [11] and [12]. 4 See affidavit of Pravilesh Chand, affirmed 16 May 2022, Exhibit PPC1. -- 3 of 6 -- 4 carry out what was proposed in the two offers. She has relied upon r 360 of the UCPR for an order that the plaintiff pay the third defendant’s costs calculated on the indemnity basis. However, as has been identified to me on behalf of the plaintiff, the third defendant’s reliance upon r 360 is misplaced because that rule applies to formal offers by a plaintiff and not a defendant. I will return to the relevant rules shortly. [12] In any event, the third defendant has identified circumstances which she contends warrant the exercise of the discretion to award indemnity costs, namely: (a) the making of allegations that ought never to have been made or the undue prolongation of a case by groundless contentions; (b) an imprudent refusal of an offer to compromise (both a formal offer and a Calderbank offer); (c) the fact that the proceedings were commenced in a wilful disregard of known facts or clearly established law; (d) the justice of the case requires that indemnity costs be awarded; and, (e) the facts, matters and circumstances support some special or unusual feature to justify the court in departing from the ordinary practice. [13] She therefore seeks that the plaintiff pay the costs on the indemnity basis or alternatively, that the plaintiff pay the third defendant’s costs on the standard basis up to 16 May 2022, and thereafter on the indemnity basis. [14] I return back to the UCPR. Relevantly, r 361 is to be considered in the present instance because that relates to costs if an offer has been made by the defendant and at trial, the plaintiff did not achieve a better result than the third defendant’s offer. The rule provides: “361 Costs if offer by defendant (1) This rule applies if— (a) the defendant makes an offer that is not accepted by the plaintiff and the plaintiff does not obtain an order that is more favourable to the plaintiff than the offer; and (b) the court is satisfied that the defendant was at all material times willing and able to carry out what was proposed in the offer. (2) Unless a party shows another order for costs is appropriate in the circumstances, the court must— (a) order the defendant to pay the plaintiff’s costs, calculated on the standard basis, up to and including the day of service of the offer; and (b) order the plaintiff to pay the defendant’s costs, calculated on the standard basis, after the day of service of the offer. (3) …” [15] It has been accepted by the plaintiff that it did not obtain an order more favourable than the terms of the offer and that the third defendant was at all material times willing to carry out what was proposed in the offer. Rule 361 provides that the form of order -- 4 of 6 -- 5 sought by the plaintiff must be made, unless the third defendant shows another order for costs is appropriate in the circumstances. The position in r 361 is the usual order to be made when the defendant avails itself of the formal offer procedure. It has been said that the third defendant has not directed any submission to the application of r 361(2) for any other order. The nominal sum further supports the contention that no alternative ground has been advanced by the third defendant to encourage a departure from the prescriptive order made under r 361(1). [16] Insofar as the application of the Calderbank offer, the plaintiff has highlighted that the offer was made at a very late stage of the proceedings. The offer was dated 19 April 2022 and allowed 14 days for acceptance. The proceeding had been on foot since 17 November 2020 and was listed for trial commencing 13 June 2022. It was submitted that the lateness of the offer weighed heavily on the third defendant because by that stage, the plaintiff had plainly incurred a significant amount of legal costs in pursuing its claim and was committed to the determination of that claim. That submission must also be considered against the backdrop of the nature of the offer compromised. Here, the third defendant offered to pay $2,000 in satisfaction of what was said to be a genuine claim for $278,592.17. I accept as has been submitted by the plaintiff that it was plainly reasonable for the plaintiff therefore to take its chances at trial when offered a sum that could not be described as anything but nominal. The nominal sum offered at the late stage of the proceeding could not be reasonably argued as one which the third defendant could have expected to have been accepted. [17] Further, the plaintiff has identified, which I am inclined to accept, that the Calderbank offer lacked clarity in its terms. Relevantly, condition 2 of the offer was: “The Deed shall contain in addition to the above, amongst others, the relevant release, bar to proceedings and boilerplate clauses and so on shall be inserted into the Deed.” [18] I accept, as was contended, that it is difficult to interpret what is meant by that condition. The most probable interpretation is that the offer is conditional on a deed, the contents of which will include a release, a bar to proceedings and boilerplate clauses “amongst others”. The terms of the release, the boilerplate provisions and the “other” clauses are entirely unspecified. The offer was uncertain, not capable of acceptance and would not have given rise to a binding compromise if accepted. [19] I also accept, as has been highlighted on behalf of the plaintiff, that the third defendant’s success at trial depends to a large degree on things that passed between her and her brother, which the plaintiff could not have been expected to know. All in all, I am satisfied that the plaintiff did have an arguable case which ultimately failed at trial against the third defendant. That failure arose out of an assessment of the evidence and much of the critical evidence was not known to, or able to be assessed by, the plaintiff prior to trial. The plaintiff was entitled to test the evidence of the defendants at trial. In this respect, I note the plaintiff has highlighted that it was initially pleaded on behalf of all defendants that on or around 28 October 2018, the second defendant and his son met with the plaintiff and informed them that all defendants withdrew from guarantee negotiations, and the plaintiff accepted this withdrawal. That was known to the plaintiff, and ultimately demonstrated in evidence, to be wrong in light of the communications through November 2018. It was reasonable for the plaintiff to test the alternative story that was then put up by the third defendant, even though it ultimately lost on that evidence. -- 5 of 6 -- 6 [20] Another factor for me which has been identified by the plaintiff to militate against an order other than that provided in r 361, was the conduct of the third defendant in amending her defence three times. The last of those amendments was made after the Calderbank offer, the same day as the formal offer and less than one month before trial. I am not satisfied that it has been shown to me by the third defendant that another order for costs is appropriate. [21] In the circumstances, the order will be: (a) The third defendant is to pay the plaintiff’s costs, calculated on the standard basis up, to and including the day of service of the formal offer (16 May 2022); and, (b) The plaintiff is to pay the defendant’s costs, calculated on the standard basis, after the day of service of the offer (i.e., from 17 May 2022). -- 6 of 6 --