Canaipa Developments Pty Ltd v TLC Jones Pty Ltd (No 2) [2021] QSC 331

SUPREME COURT OF QUEENSLAND CITATION: Canaipa Developments Pty Ltd v TLC Jones Pty Ltd (No 2) [2021] QSC 331 PARTIES: CANAIPA DEVELOPMENTS PTY LTD (ACN 118 404 461) (plaintiff) v TLC JONES PTY LTD (ACN 142 234 099) AS TRUSTEE FOR TLC SUPERMARKETS UNIT TRUST NO 2 ABN 46 746 097 161 (defendant) FILE NO/S: BS No 678 of 2021 DIVISION: Trial Division PROCEEDING: Civil ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 10 December 2021 DELIVERED AT: Brisbane HEARING DATE: 7 December 2021 JUDGE: Applegarth J ORDER: The plaintiff pay 80% of the defendant’s costs of and incidental to the proceeding, including the hearing on 7 December 2021, to be assessed on the standard basis. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – DEPRIVING SUCCESSFUL PARTY OF COSTS – OTHER CASES – SUBSTANTIAL SUCCESS – where the plaintiff failed on all but one minor issue – where the plaintiff succeeded in establishing that the expert failed to complete the expert determination in a limited respect – whether the plaintiff or the defendant enjoyed substantial success – whether the party which has enjoyed substantial success should be deprived of some of its costs Uniform Civil Procedure Rules 1999 (Qld), rr 681, 684 BHP Coal Pty Ltd & Ors v O & K Orenstein & Koppel AG & Ors (No 2) [2009] QSC 64, cited Canaipa Developments Pty Ltd v TLC Jones Pty Ltd [2021] QSC 237, cited Cretazzo v Lombardi (1975) 13 SASR 4, cited Interchase Corporation Ltd (in liq.) v Grosvenor Hill -- 1 of 8 -- 2 (Queensland) Pty Ltd (No 3) [2003] 1 Qd R 26, cited Kosho Pty Ltd v Trilogy Funds Management Ltd (No 2) [2013] QSC 170, cited Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15, cited Oshlack v Richmond River Council (1998) 193 CLR 72, cited Re Quality Blended Liquor Pty Ltd (No 2) [2014] QSC 307, cited Speets Investment Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39, cited The Australian Institute for Progress Ltd v The Electoral Commission of Queensland & Ors (No 2) [2020] QSC 174, cited COUNSEL: A J Schriiffer for the plaintiff M Black for the defendant SOLICITORS: McCarthy Durie Lawyers for the plaintiff PM Lee & Co Lawyers for the defendant [1] On 17 September 2021 I determined, contrary to the plaintiff’s position, that Cushman & Wakefield had been validly appointed as a joint expert, that Mr Cox had been allocated as an “appropriate expert” and was not required to start the expert determination process again, but could rely on the work completed by Ms Rudken.1 I also rejected the plaintiff’s submissions that: (a) the defendant had impermissibly made submissions to the joint expert in breach of the Mediation Agreement; (b) the joint expert had misconstrued the relevant lease; (c) the joint expert had impermissibly taken into account submissions or material in a way that invalidated the determination; and (d) the joint expert had impermissibly proceeded on the basis that the Retail Shop Leases Act 1994 (Qld) applied to the lease. [2] I did, however, conclude that the joint expert had failed to complete its task in one minor respect. This was that it did not perform the essentially mathematical task of deducting from the amount claimed (about which there was no dispute) the amounts which it found to be overcharged.2 In order to do this it was required to determine whether the invoiced amounts included or excluded GST. The expert had highlighted this issue to the parties in reports on 28 August 2020, 19 October 2020 and 21 October 2020.3 Its report of 21 October 2020 reiterated the point that in order to calculate the total amount overcharged the invoiced amounts would need to be reviewed and confirmed. It recommended that a final summary be prepared by a chartered accountant. 1 Canaipa Developments Pty Ltd v TLC Jones Pty Ltd [2021] QSC 237. 2 At [152]-[167]. 3 At [96], [120], [161]. -- 2 of 8 -- 3 [3] The plaintiff did not respond to those proposals. It simply did not want Cushman & Wakefield to complete the determination because it contended that Cushman & Wakefield had made erroneous decisions up to that point. The plaintiff asserted in letters dated 24 September 2020 and 6 October 2020 that Cushman & Wakefield should not complete the task. [4] Rather than respond to Cushman & Wakefield’s point about the need to ascertain whether invoiced amounts included or excluded GST and its recommendation that this final part of the task be assisted by a summary prepared by a chartered accountant, the plaintiff chose to sue. [5] The real and substantial issues in dispute between the parties at the hearing were agreed by them and are set out in my judgment.4 [6] The plaintiff failed to establish all but one of its challenges to the expert determination. As I explained, the expert determination did not “quite get over the line”.5 This was because the expert did not complete the task in respect of GST that its letter of 21 October 2020 said needed to be done. If that had been done then it would have permitted a simple mathematical exercise to be undertaken so as to arrive at a precise figure for each year as to the annual allowable expenditure incurred on outgoings, expressed as either being inclusive or exclusive of GST. In the end result, the relevant task was not completed, albeit in a minor respect.6 [7] Having delivered my reasons, the question of relief was stood over at the request of the parties.7 This allowed the parties the opportunity to consider what should be done in the light of my findings, including whether the joint expert or some other party should be asked to complete the accounting exercise over GST that I found had not been completed. Paragraph 4 of the plaintiff’s prayer for relief had sought an order that “an independent third party be appointed as an expert to make the Joint Expert determination pursuant to the Mediation Agreement, with amendments to the timeframes”. I indicated that it would be necessary for the parties and the court to consider the appropriateness of making such an order since it had the potential to be wasteful of costs and productive of delay. [8] The parties were unable to agree a process by which the accounting exercise over GST would be completed by the appointed joint expert, another expert, a chartered accountant or the parties themselves. Therefore, the parties made written submissions about the appropriate form of declaratory relief and consequential orders. The matter was listed for oral submissions on 7 December 2021. I heard argument and for reasons given that day indicated that I was minded to make the following declaration and consequential order, as proposed by the defendant: “1. THE COURT DECLARES that the Joint Expert appointed by the Plaintiff and the Defendant pursuant to a contract dated 23 June 2020 has not completed the Joint Expert determination, but only to the extent that the determination does not disclose whether the total amount determined as an Over Charge for each year is inclusive or exclusive of GST. 4 At [14]. 5 At [168]. 6 At [166]. 7 At [171]. -- 3 of 8 -- 4 2. The parties are to instruct the Joint Expert to complete the Joint Expert determination by calculating each amount which the Joint Expert determined to be an Over Charge, or the total amount determined as an Over Charge for each year, as a figure that is specified as being either inclusive or exclusive of GST and for that purpose the Joint Expert may retain an accountant to make the calculation.” [9] On further reflection, I consider that a more complete form of declaratory order would be to add the words: “, and thereby does not disclose the amount of the Over Charge to be deducted from the claimed amount of outgoings so as to arrive at a figure for each relevant year as to the annual allowable expenditure, as provided for in clause 5 of the contract.” [10] Also the consequential order should be more complete and state: “2. The parties are to instruct the Joint Expert to complete the Joint Expert determination by: (a) calculating each amount which the Joint Expert determined to be an Over Charge, or the total amount determined as an Over Charge for each year, as a figure that is specified as being either inclusive or exclusive of GST and for that purpose the Joint Expert may retain an accountant to make the calculation; (b) deducting the amount determined as an Over Charge for each year from the claimed amount of outgoings for that year (with each amount being expressed to be either inclusive or exclusive of GST); and (c) arriving at a determination of the annual allowable expenditure, as provided for in clause 5 of the contract, for each relevant year.” [11] I also received submissions on costs and reserved that question. These are my reasons on costs. The plaintiff’s submissions on costs [12] The plaintiff submitted that this was not a case where it was appropriate to depart from the general rule that costs follow the event. Alternatively, it argued that any reduction in its costs should be minimal. It contended that it had been successful in impeaching the expert determination on the ground that the expert did not perform the correct task due to the GST issue. Although it failed on other issues relating to the validity of the expert’s appointment and respects in which it was claimed that the expert did not perform the task given to it, these additional issues were said to not have resulted in the parties incurring significant additional costs. The plaintiff argued that the same amount of disclosure and evidence would have been required by way of relevant documents and correspondence. The hearing took one day and, according to the plaintiff, if it had sought to impeach the expert determination based simply on -- 4 of 8 -- 5 the ground that the expert did not perform the correct task due to the GST issue, the hearing would have taken half a day. The defendant’s submissions on costs [13] The defendant submitted that the order for costs should reflect the fact that it succeeded on five out of the six substantive issues and so should have its costs of the proceeding. The plaintiff succeeded on only one issue and, as my judgment recorded, the expert determination was not completed “to a very limited extent” or in “a minor respect”.8 The defendant’s submissions analysed the extent to which the issues at trial occupied time and submissions. They noted that the GST issue did not feature at all in the plaintiff’s pleading and was mentioned in only six out of a total of 192 paragraphs in the plaintiff’s submissions. The GST issue was a minor one in respect of evidence in a case in which the agreed documentary evidence (exhibit 1) consisted of about 826 pages. Relevant principles [14] It is convenient to repeat a number of the relevant principles that were stated by me in The Australian Institute for Progress Ltd v The Electoral Commission of Queensland & Ors (No 2).9 These principles accord with other recent judgments.10 [15] In very general terms costs are awarded to the successful party. However, it is not uncommon for the parties to concluded civil litigation to both claim success.11 [16] The general rule stated in r 681 of the Uniform Civil Procedure Rules 1999 (Qld) is that costs are at the discretion of the Court but “follow the event, unless the court orders otherwise”. This reflects the general rule that a party who on the whole succeeds in the action receives the general costs of the action. [17] The “event” may not be confined to the result or outcome of the proceeding. Where there were two or more issues or questions in the proceeding, each of which gave rise to an “event” on each separate issue, costs may be ordered according to the outcome of that issue.12 The term “issue” in this context is not to be construed as a precise issue in the technical pleading sense, but rather as a disputed question of fact or law.13 [18] Good reason is required to depart from the general rule that costs follow the event. The general rule is intended to compensate a successful party and, as between parties, “fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation”.14 The general rule is also grounded in reasons of public policy.15 [19] Rule 684 provides an exception to the general rule that costs should follow the event. It provides that the Court may make an order for costs in relation to a particular 8 At [166]. 9 [2020] QSC 174 at [10]-[15] (“AIP”). 10 This includes Speets Investment Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39 at [11]-[17]. 11 AIP at [1]-[3]. 12 Interchase Corporation Ltd (in liq.) v Grosvenor Hill (Queensland) Pty Ltd (No 3) [2003] 1 Qd R 26 at 60-61 [83]. 13 Cretazzo v Lombardi (1975) 13 SASR 4 at 12. 14 Oshlack v Richmond River Council (1998) 193 CLR 72 at 97. 15 Ibid. -- 5 of 8 -- 6 question in, or a particular part of, a proceeding. The general rule remains, and necessarily the circumstances which would engage r 684 are exceptional.16 [20] The fact that the word “event” in r 681 is not confined to the final result of the proceeding, but may refer to the outcome of a separate issue where there are two or more issues in the proceeding, should not be thought to encourage a proliferation of issue identification. Instead, it recognises the injustice that may be produced if the word “event” was confined simply to the result or outcome of the proceeding. Moreover, the fact that a party has been unsuccessful on a particular issue, but successful on others, does not necessarily justify the awarding of costs on an issues basis. Courts may on occasions apportion costs in a way that fairly reflects both the outcome, and the costs associated with, the determination of different questions.17 However, ordinarily the fact that a successful party fails on a particular issue does not mean that it should be deprived of some of its costs. Also, a court will generally only deprive the successful party of the costs relating to an issue on which it was unsuccessful where that issue was clearly dominant or separable.18 [21] In Speets Investment Pty Ltd v Bencol Pty Ltd (No 2),19 Bond J (with whom Sofronoff P and Callaghan J agreed) stated: “Where there are multiple issues which are determined in different directions as between the parties, a court might form an overall impression having regard to the significance of the issues, the way they were determined, and the amount of time and cost spent on them, and order one party to pay a proportion of another party’s costs as a way to reflect fairly the parties’ comparative success or failure in the outcome which was obtained. Courts often prefer to avoid the complicated form of costs assessment that would follow if different issues are determined in different directions as between the parties and costs were to be awarded in respect of issues.” [22] Simply expressed, in exercising its discretion as to costs regard may be had to the success or lack of success enjoyed by a party on issues that occupied an identifiable part of the case. It does not follow that an issues-based costs order should be made. As I observed in Kosho Pty Ltd v Trilogy Funds Management Ltd (No 2),20 ordinarily, the fact that a successful plaintiff fails on particular issues does not mean that it should be deprived of some of its costs. However, a successful party that has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party’s costs of them. Application of these principles [23] The application of these principles involves, in part, an assessment as to who has been the successful party. It also may entail the identification of a relevant “event”. An “event” is not confined to the result or an outcome of the proceeding but the event of an issue or separate issues if there are more than one. 16 BHP Coal Pty Ltd & Ors v O & K Orenstein & Koppel AG & Ors (No 2) [2009] QSC 64 at [7]. 17 Re Quality Blended Liquor Pty Ltd (No 2) [2014] QSC 307 at [16]. 18 Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 at [64]-[66]. 19 [2021] QCA 39 at [17]. 20 [2013] QSC 170 at [4]-[5] citing earlier authority. -- 6 of 8 -- 7 [24] If a choice had to be made between the plaintiff and the defendant based on the measure of success enjoyed by each party, then I would not regard the plaintiff as the successful party. Its lack of success on all but one minor issue did not entitle it to the form of declaration that would have been appropriate had it succeeded on other issues, including the validity of the appointment of the joint expert and alleged errors made by the joint expert. Instead, its limited success was reflected in the form of declaration and the consequential order. [25] The plaintiff was successful to a very limited extent, namely in establishing that the joint expert had not completed the task in one respect. The Court has made a declaration to that effect and an order for the parties to instruct the joint expert to complete the determination by addressing the issue of the inclusion or exclusion of GST. The joint expert did not complete the determination in this limited respect because: (a) in October 2020 the plaintiff did not respond to the joint expert’s inquiry about the need to review the invoiced amounts to ascertain whether they included or excluded GST or its recommendation that a chartered accountant undertake a final summary of this matter; (b) the plaintiff did not join in directing the joint expert to complete that task (necessitating the consequential order made on 7 December 2021); and (c) the plaintiff instead litigated all issues. [26] Incidentally, the plaintiff unsuccessfully opposed on 7 December 2021 the making of a consequential order to the effect that the parties instruct the joint expert to complete the determination by calculating the GST. [27] In summary, the plaintiff in October 2020 did not respond to the joint expert’s proposal about the completion of the relevant task in relation to GST and in December 2021 opposed an order that would have the joint expert complete the task that the plaintiff established that the expert had yet to complete. [28] To the extent that the plaintiff was successful in obtaining a determination that the expert had not completed the determination to a minor extent the plaintiff had a small measure of success. The plaintiff failed to impeach the validity of the expert’s appointment or the determinations that were made by the joint expert. [29] Success, like beauty, may be in the eye of the beholder. An objective assessment is that the plaintiff was not the successful party. It failed on all issues, save for one issue that occupied a very small part of the evidence and the submissions. The issue upon which it succeeded became an issue because the plaintiff did not constructively respond to the joint expert’s 21 October 2020 query and recommendation in relation to the completion of the task. It is not evident that if it had done so the parties would have been required to litigate the issue upon which the plaintiff succeeded. Instead, it seems more likely that the expert would have been instructed in terms similar to the instruction that I have now directed the parties to give. [30] The defendant enjoyed substantial success. However, it unsuccessfully argued that the non-completion of the GST issue did not present a problem. If I was to treat the defendant as the successful party then its lack of success on that issue would not necessarily mean that it should be deprived of some of its costs. However, in my -- 7 of 8 -- 8 view this is a case in which the party which has enjoyed substantial success, namely the defendant, but failed on an issue should be deprived of some of its costs. [31] To the extent that the plaintiff is characterised as a successful party, having obtained a determination that the expert had not completed the determination in one minor respect, this is a case in which it is appropriate that the plaintiff be deprived of its costs and ordered to pay a substantial part of the defendant’s costs. [32] The plaintiff’s success was very limited and arose, in part, because it did not wish the joint expert to complete the determination, including by completing the GST exercise identified by the expert. The plaintiff failed on substantial issues that occupied a substantial part of the preparation for hearing and submissions at it. The defendant was, overall, the successful party. Conclusion [33] The defendant’s failure on the issue upon which the plaintiff succeeded should be reflected in it being deprived of some of its costs. The plaintiff’s lack of success should be reflected in a costs order that has the effect of requiring it to pay the defendant’s costs of litigating the many issues upon which the defendant succeeded. Rather than order that the plaintiff have its costs of the issue upon which it succeeded and that the defendant have its costs of the issues upon which it succeeded, an appropriate order as to costs is to order the plaintiff to pay 80% of the defendant’s costs of and incidental to the proceeding, including the hearing on 7 December 2021, to be assessed on the standard basis. -- 8 of 8 --