Dreamtea Pty Ltd v Ochkit Pty Ltd; Mistranch Pty Ltd v Ochkit Pty Ltd [2017] QSC 183

SUPREME COURT OF QUEENSLAND CITATION: Dreamtea Pty Ltd v Ochkit Pty Ltd & Anor; Mistranch Pty Ltd & Ors v Ochkit Pty Ltd & Anor [2017] QSC 183 PARTIES: DREAMTEA PTY LTD (ACN 069 396 310) (Plaintiff) v OCHKIT PTY LTD (ACN 010 874 058) (First Defendant) and WILLIAM JOHN HENRY HOUWING and CHRISTINE LESLIE HOUWING (Second Defendants); MISTRANCH PTY LTD (ACN 069 396 398) (First Plaintiff) and DREAMTEA PTY LTD (ACN 069 396 310) (Second Plaintiff) and GEORGE KLENOWSKI (Third Plaintiff) v OCHKIT PTY LTD (ACN 010 874 058) (First Defendant) and WILLIAM JOHN HENRY HOUWING and CHRISTINE LESLIE HOUWING (Second Defendants) FILE NO/S: SC No 1 of 2010; SC No 71 of 2010 DIVISION: Trial PROCEEDING: Claim ORIGINATING COURT: Supreme Court at Cairns DELIVERED ON: 1 September 2017 DELIVERED AT: Cairns HEARING DATE: 30 March 2017 and 26 April 2017 JUDGE: Henry J -- 1 of 11 -- 2 ORDERS: Orders in SC 1/2010 1. Judgment for the plaintiff against the defendants in the amount of $4,218.47. 2. The defendants pay the plaintiff’s costs of the declaratory relief re caveat component of the claim and 2/12ths of the plaintiff’s nominal and compensatory damages component of the claim to be assessed on the standard basis on the District Court scale. 3. The plaintiff pay the defendants’ costs of the loss of use of monies claim component of the claim and the forced sale claim component of the claim to be assessed on the standard basis on the Supreme Court scale. Orders in SC 71/2010 1. Judgment for the first plaintiff against the defendants in the amount of $19,924.79. 2. The defendants pay the first plaintiff’s costs, with costs incurred up to and including 29 March 2012 to be assessed on the standard basis on the Supreme Court scale and with costs incurred from and including 30 March 2012 to be assessed on the standard basis on the Magistrates Court scale, save that costs incurred from and including 24 December 2015 are to be assessed as an assessment for Magistrates Court on the indemnity basis. 3. The second and third plaintiff pay the defendants’ costs of defending the second and third plaintiff’s claim, which would not otherwise have been incurred in defending the first plaintiff’s claim, to be assessed on the standard basis on the Supreme Court scale. CATCHWORDS: PROCEDURE – COSTS – DEPARTING FROM THE GENERAL RULE – OTHER CASES – FAILURE IN PORTION OF A CASE – where plaintiff claims entitlement to costs on basis that it secured an award of damages – where the plaintiff did not succeed on all or substantially majority of its claim – where the defendants submit the plaintiff ought pay the defendants’ costs – where court held it is an appropriate case to articulate mixed costs -- 2 of 11 -- 3 Uniform Civil Procedure Rules 1999 (Qld) Chapter 9 Part 5, r 360, r 684, r 691(4), r 697, r 697(4) Johnson v Perez (1989) 166 CLR 351 Quality Corp (Aus) P/L & Ors v Millford Builders (Vic) P/L & Ors [2003] QCA 550, applied COUNSEL: S J Deaves for the plaintiff K M Wilson QC for the defendants SOLICITORS: Macrossan & Amiet for the plaintiffs Australian Property Lawyers for the defendants [1] I gave judgment for the plaintiff in this matter, leaving some issues for determination on hearing further from the parties.1 [2] The matter involved sundry financial issues in the wake of the completion of a joint development by subdivision of two adjoining lots of land north of Mackay at Florence Street, Eimeo. There were two claims. One, numbered SC 1/2010, by Dreamtea against Ochkit and the Houwings, related to delays in signing title documents and paying bills. That claim was heard with the other claim, numbered SC 71/2010, pursuant to a direction of the Court. The second claim was brought by Mistranch, Dreamtea and Mr Klenowski, seeking indemnification from the Houwings for costs incurred in defence of a third party action. [3] It remains to now determine: (a) calculation of interest; (b) whether damages are payable by both defendants or only the first defendant in S1/2010; and (c) costs. Calculation of interest Calculation of interest for SC 1/2010 [4] In relation to SC 1/2010 there is agreement on the calculation of interest between the parties, save with respect to two invoices.2 Those two invoices are invoices 1086 and 1180. At issue is the question of from when interest on those invoices should be calculated. 1 [2017] QSC 9 (“reasons”). The short titles of parties and other abbreviations adopted in those reasons are also used herein. 2 T2-11 L38-39. -- 3 of 11 -- 4 [5] As Mason CJ observed in Johnson v Perez,3 the general, though not universal, rule is that “damages for torts or breach of contract are assessed at the date of breach or when the cause of action arises”.4 In alignment with this rule, the defendants emphasise those invoices were paid in full by Mistranch and the plaintiff Dreamtea did not reimburse Mistranch for its payment of Ochkit’s share of the money payable under those invoices until 21 August 2014. Up until that date it was Mistranch, not the plaintiff, who was at a loss. On this basis the defendants say 21 August 2014 is the date from which interest ought be calculated. [6] Counsel for the plaintiff rightly concedes that this is the correct date from which to calculate interest when considering the claim on a contractual basis, as the plaintiff did not incur a loss until the payment was made. However, counsel for the plaintiff submits that to the extent there is also an entitlement in restitution, the court must look at the unjust enrichment of the defendants as opposed to the loss to the plaintiff, or lack thereof. It is uncontroversial that is what a court must do in assessing compensation for loss in restitutionary damages.5 [7] However it must be borne in mind I have already assessed the damages amounts owing in respect of invoices 1086 and 1180 and I did not discern any variation in their quantum, whether occasioned by breach of contract or unjust enrichment. It is important not to conflate the processes of assessing damages and of assessing interest. I am now solely concerned with the interest to which Dreamtea is entitled for being deprived of its entitlement to the use of the damages amounts. Given Dreamtea was only deprived of the use of those amounts from 21 August 2014, interest should only be payable on those amounts from then. [8] I record for completeness that the plaintiff also submitted6 Mistranch acted as Dreamtea’s agent in paying Ochkit’s share and that for that reason Dreamtea’s entitlement to interest ought to commence from the date of Mistranch’s payment. I do not accept it was so acting. The evidence suggests the making of the payment amount owed by Ochkit was a unilateral choice by Mistranch. Even if it had been deemed by circumstances to have been acting as anyone’s agent in paying Ochkit’s share, it would more likely have been deemed as acting as Ochkit’s agent. Further, it is not suggested, in paying Mistranch Ochkit’s share of the amount Mistranch had paid, that Dreamtea paid Mistranch interest. Moreover, if it had made such a payment, that would have featured in the assessment of Dreamtea’s damages assessment, not the interest payable to Dreamtea on its damages. [9] The interest calculation on SC 1/2010 to the date of judgment, adopting the above finding and the calculation periods otherwise agreed by the parties, are as follows: 3 (1989) 166 CLR 351. 4 Johnson v Perez (1989) 166 CLR 351, 355-6. 5 Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51. 6 Referring to Mason & Carter’s Restitution Law in Australia 2008 Second Ed. p 59 and Andrew Burrows The Law of Restitution 1993 pp 478-479. -- 4 of 11 -- 5 Invoice Number Damages Assessed $ Interest Calculation Period Interest Calculation per Queensland Court’s Interest Calculator $ Total $ 08/010 08/016 08/019 30.00 01.02.09 to 26.08.09 1.70 31.70 1086 366.67 21.08.14 to 13.02.17 55.56 422.23 16001 448.58 24.12.09 to 13.02.17 256.88 705.46 16217 1,348.23 29.12.09 to 13.02.17 770.24 2,118.47 1180 672.22 21.08.14 to 13.02.17 101.87 774.09 Totals: $2,865.70 $1,186.25 $4,051.95 Calculation of Interest for SC 71/2010 [10] The parties agree the appropriate date for calculation of interest in respect of SC 71/2010 runs from the date of judgment of McMeekin J on 29 March 2012. The interest on the adjudged indemnification amount of $14,247.56 from 29 March 2012 to the date of my judgment on 13 February 2017 is $4,935.72,7 giving a total of $19,138.28. Judgment Inclusive of Interest [11] I gave judgment on 13 February 2017 in the amounts of $2,865.70 “plus interest to be determined” in SC 1/2010 and $14,247.56 “plus interest to be determined” in SC 71/2010. [12] The parties approached the ensuing argument on the basis that interest should be assessed on the above adopted pre-judgment methodology up to the date of that judgment and that I would calculate the post-judgment interest between 14 February 2017 (the day following judgment) and today with a view to articulating a judgment figure as at today. To implement that approach I will in each case again order judgment, but in a total amount in each case which represents the 7 Per Queensland Courts Interest Calculator. -- 5 of 11 -- 6 already articulated judgment amount of 13 February 2017, plus pre-judgment interest up to then, plus post-judgment interest up to now. [13] In SC 1/2010 the post-judgment interest8 on the $4,051.95 ($2,865.70 damages + $1,186.25 pre-judgment interest), from 14 February 2017 to today is $166.52, giving a total judgment amount owing today of $4,218.47. [14] In SC 71/2010 the post-judgment interest9 on $19,138.28 ($14,247.56 indemnification + $4,935.72 pre-judgment interest) from 14 February 2017 to today is $786.51, giving a total judgment amount owing today of $19,924.79. Whether damages are payable by both defendants or only the first defendant [15] In my orders of 13 February 2017 I indicated I would hear from the parties as to whether the damages in SC 1/2010 are payable by both defendants or only the first defendant. [16] The parties agree the monetary judgment ought to be entered as against both defendants, so judgment will be entered against “the defendants”. Costs in SC 1/2010 [17] The plaintiff submits10 that having secured an award of damages and a declaration in this matter it is prima facie entitled to an order for costs on the basis that costs ordinarily follow the event, per Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”). Such an outcome would be manifestly unfair in the circumstances of this matter because the plaintiff did not succeed on all or even a substantial majority of its claim. The plaintiff put the defendants to the cost of defending some significant components of the claim on which the plaintiff wholly failed. [18] The defendants submit its degree of success was so great as to justify the plaintiff being ordered to pay the defendants’ costs. That would not be an appropriate outcome either, given the mix of outcomes here. It is obviously an appropriate case in which to articulate mixed costs orders. [19] The plaintiff’s claim advanced readily identifiable, separate categories or components of liability, all bar two of which involved quite different evidentiary foundations. Some would have involved significantly more expense to litigate than others, for example one of them attracted expert evidence. For this reason it is inappropriate for the court to arrive at a single overall apportionment based solely on a perception of the overall degree of success and failure. The other obvious option is to make separate costs orders in respect of separate components or parts of the claim, as is allowed by the UCPR 684. It was argued this would give rise to too difficult a task for a costs assessor. However, the separate 8 At 7.5% (1.5% + 6%). 9 At 7.5% (1.5% + 6%). 10 Citing Oshlack v Richmond River Council (1998) 193 CLR 72, 97. -- 6 of 11 -- 7 evidentiary foundations of the separate components of the claim means the assessor’s task will not be unusually onerous. They make this a quintessential example of a case in which it is appropriate to make separate costs orders in respect of the separate components involved. [20] As my reasons for judgment explained,11 the relief sought in SC 1/2010 fell into five categories or components. Those components12 and the outcomes in each were, in summary: (a) The nominal damages claim: the plaintiff succeeded in respect of three of the twelve invoices that claim related to,13 securing a damages assessment of $30. (b) The compensatory damages claim: the plaintiff succeeded in respect of four of the eight invoices that claim related to (within the aforementioned 12 invoices),14 securing a damages assessment of $2,835.70. (c) The loss of use of monies claim: the plaintiff lost this component of its claim, which alleged a loss of $18,131.35. (d) The forced sale claim: the plaintiff lost this component of its claim, which alleged a loss of $77,957.50. (e) Declaratory relief re caveat: the plaintiff succeeded in seeking its declaration. [21] The nominal damages and compensatory damages components of the claim overlapped to such an extent that they were litigated collectively. They required consideration of twelve individual invoices and the circumstances of the payment or non-payment of each of them. For costs purposes the nominal damages and compensatory damages components lend themselves to assessment as a single component of the claim, namely nominal and compensatory damages. Looked at collectively the plaintiff enjoyed success in respect of seven of the 12 invoices at issue, while the defendants enjoyed success in respect of five of the invoices at issue. Each invoice required separate consideration of a generally similar proportion. It may reasonably be inferred that the costs incurred by either side in respect of each would have been of generally similar proportion. [22] The combined nominal and compensatory damages component therefore lends itself to a simple mathematical apportionment of costs. Rather than order the defendants pay the plaintiff 7/12ths of its costs of that component and the plaintiff pay the defendants 5/12ths of its costs of that component this is an appropriate circumstance in which to simply order that the defendants pay the plaintiff 1/6th of its costs of the nominal and compensatory damages component (representing the 2/12ths difference between the parties’ respective successes and failures in this component). 11 Reasons [20]. 12 Using the short titles attributed to them in my reasons at [20]. 13 SOC [4]. 14 SOC [4]. -- 7 of 11 -- 8 [23] As to the other components they were all quite separate of each other. They involved two complete losses and one complete win for the plaintiff. There should be costs orders reflecting those outcomes. [24] Thus, the defendants should be ordered to pay the plaintiff’s costs of the declaratory relief re caveat component of the claim and 2/12ths of the plaintiff’s nominal and compensatory damages component of the claim. The plaintiff should be ordered to pay the defendants’ costs of the loss of use of monies claim component of the claim and the forced sale claim component of the claim. [25] The plaintiff argues its costs should be awarded on the Supreme Court scale despite UCPR 697. It emphasises SC 1/2010 was ordered by McMeekin J to be heard with SC 71/2010 in the Supreme Court at Mackay. However, it appears the focus of that order, sought by the plaintiff with the consent of the defendants was the concurrency of the hearings, not the appropriateness of using the jurisdiction of the Supreme Court. The defendants’ consent to the order did not amount to a concession as to the appropriate scale of costs to be awarded at the end of the trial. [26] In the end result the quantum of the plaintiff’s sole monetary award was only $4,051.95. That is relief which could have been given in the Magistrates Court. However, part of the judgment in the plaintiff’s favour included a declaration which could not have been given in the Magistrates Court but could have been given in the District Court.15 [27] An application of UCPR 697(4) to those circumstances means the plaintiff’s awarded costs must be assessed on the District Court scale unless the court otherwise orders. The defendants seeks an order otherwise, pointing to the low monetary award and the lack of utility in seeking a declaration. However, I have found there was utility in the declaration, a declaration which the defendants could easily have avoided the need for had they complied with their contractual obligation. The plaintiff’s costs should be awarded on the District Court scale. [28] It is unnecessary, but to remove confusion, my costs order in favour of the defendants in each case will specify their costs are to be assessed on the Supreme Court scale. Costs in SC 71/2010 [29] In claim SC 71/2010 the first plaintiff won and the second and third plaintiff lost. [30] The plaintiffs contend, rather selectively, that costs should follow the event to favour them in respect of the winning first plaintiff but should not follow the event to favour the defendants against the losing second and third plaintiff. They submit, because of the nature of the case, the defendants’ costs in defending the claim of the second and third plaintiff would involve no costs peculiar to their defence which would not otherwise have been incurred in defending the first 15 See District Court of Queensland Act 1967 (Qld) s 68(1)(b)(xiii). -- 8 of 11 -- 9 plaintiff’s claim. That might be so but there is no basis to assume it will inevitably be so. It is a feature of the matter which can be dealt with on assessment. The second and third plaintiff should pay the defendants’ costs of defending the second and third plaintiff’s claim which would not otherwise have been incurred in defending the first plaintiff’s claim. [31] As to the defendants’ obligation to pay the costs of the winning first plaintiff the low monetary judgment achieved was a judgment which could have been given in a Magistrates Court when the proceeding began. The orthodox outcome pursuant to UCPR 697 would therefore be that the first plaintiff’s costs should be assessed on the Magistrates Court scale. [32] One argument advanced against such a course is the aforementioned point that McMeekin J ordered the hearing of both matters in the Supreme Court. For reasons already given that course does not warrant an order otherwise under UCPR 697. [33] However, a more meritorious argument arises from the fact that until the McMeekin J’s decision in the personal injury trial on 29 March 2012, the potential quantum was so high that the matter should properly have been before the Supreme Court. This warrants a favourable exercise of the discretion to order otherwise under UCPR 697, at least to that point in time. While the claim was not amended to reflect the significant reduction in potential quantum until later in 2012 the first plaintiff ought have known, in incurring expenditure from 30 March 2012 onwards, that it was incurring costs in respect of a quantum range which would inevitably be comfortably within the Magistrates Courts’ jurisdiction. While the special circumstances pertaining up to 29 March 2012 justify an order that the first plaintiff’s costs to that point be assessed on the Supreme Court scale, after that time, the ordinary course under UCPR 697 ought follow. [34] The first plaintiff asserts its costs ought be awarded on the indemnity basis after the lapse of a settlement offer it made in 2015 involving a preparedness to settle for less than the award determined by me. It argues the offer, made by letter of 9 December 201516 constituted a formal offer under UCPR 360. The offer, which was open for 14 days, included the following terms: “1. That the Defendants pay the Second Plaintiff the sum of TEN THOUSAND DOLLARS ($10,000.00) inclusive of interest in full and final satisfaction of the Plaintiffs’ claim. 2. That the Defendants pay:- (a) The First Plaintiff’s costs of the proceedings assessed in accordance with the scale of costs applicable in the Supreme Court on the standard basis up to 4 November 2012; and (b) The First Plaintif and Second Plaintiff’s costs of the proceedings assessed in accordance with the scale of costs 16 Exhibit “SGN-1” to Affidavit of Stuart Geoffrey Naylor sworn 27 March 2017 for SC 71/2010. -- 9 of 11 -- 10 applicable in the Magistrates Court on the standard basis from 5 November 2012.” [35] The defendants dispute the plaintiffs’ claim that they have bettered that offer because the offer was made by all three plaintiffs, two of whom failed at trial.17 In this sense the offer was a ‘global offer’ and not an offer to settle within the meaning of Part 5 Chapter 9 UCPR, for the reasons explained by McPherson J in Quality Corp (Aus) P/L & Ors v Millford Builders (Vic) P/L & Ors.18 However, that does not necessarily preclude the awarding of indemnity costs in the exercise of the court’s discretion.19 [36] The defendants emphasise paragraph one of the above offer required the defendants to pay the second plaintiff the amount stipulated but the second plaintiff was wholly unsuccessful in its claim. However, that should not be a bar to a discretionary awarding of indemnity costs because the offer was a ‘global offer’ made on behalf of all plaintiffs generally. Moreover it was made by plaintiffs whose financial arrangements were closely connected and effectively united under the decision making of the third plaintiff. They were easily in a position to elect to accept the offer and determine between each other where the bounty of the settlement ought flow as between them. It was of no moment to the defendants where the money went as between the plaintiffs, given all three plaintiffs made the offer. [37] A feature of the offer which arguably tells against it warranting the awarding of indemnity costs is that it involved the payments of some costs which would not be identical to the costs outcome here. For instance, it was conditioned inter alia upon the defendants paying the second plaintiff’s costs of the proceeding assessed on the Magistrates court scale on the standard basis from 5 November 2012. In the result the second plaintiff failed and was thus not entitled to costs. That would not matter however if the quantum range of those costs when added to the $10,000 settlement figure would still have been less than the eventual judgment amount. It is likely it would have been less, having regard both to the Magistrates Court costs scale amounts and the likelihood only a small proportion of the second plaintiff’s costs would be peculiar to its case and not otherwise have been incurred in pursuing the first plaintiff’s case. [38] Realistically, even allowing for the above mentioned elements of imprecision in the offer regarding costs, it may safely be inferred the plaintiffs’ offer of 9 December 2015 represented a better overall financial result for the defendants than they have since secured by pressing on to trial. It is therefore appropriate to exercise my discretion to order an assessment for Magistrates Court on the indemnity basis20 in respect of costs incurred subsequent to the lapse of the offer, that is, from 24 December 2015. 17 T2-12 L35-36. 18 [2003] QCA 550, [6]; T2-13 L30-33. 19 Quality Corp (Aus) P/L & Ors v Millford Builders (Vic) P/L & Ors [2003] QCA 550, [7]. 20 See UCPR r 691(4). -- 10 of 11 -- 11 Orders [39] My orders in claim SC 1/2010 are: 1. Judgment for the plaintiff against the defendants in the amount of $4,218.47. 2. The defendants pay the plaintiff’s costs of the declaratory relief re caveat component of the claim and 2/12ths of the plaintiff’s nominal and compensatory damages component of the claim to be assessed on the standard basis on the District Court scale. 3. The plaintiff pay the defendants’ costs of the loss of use of monies claim component of the claim and the forced sale claim component of the claim to be assessed on the standard basis on the Supreme Court scale. [40] My orders in claim SC 71/2010 are: 1. Judgment for the first plaintiff against the defendants in the amount of $19,924.79. 2. The defendants pay the first plaintiff’s costs, with costs incurred up to and including 29 March 2012 to be assessed on the standard basis on the Supreme Court scale and with costs incurred from and including 30 March 2012 to be assessed on the standard basis on the Magistrates Court scale, save that costs incurred from and including 24 December 2015 are to be assessed as an assessment for Magistrates Court on the indemnity basis. 3. The second and third plaintiff pay the defendants’ costs of defending the second and third plaintiff’s claim, which would not otherwise have been incurred in defending the first plaintiff’s claim, to be assessed on the standard basis on the Supreme Court scale. -- 11 of 11 --