Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd (No. 2) [2017] QDC 291

DISTRICT COURT OF QUEENSLAND CITATION: Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & Anor (No. 2) [2017] QDC 291 PARTIES: CHAPEL OF ANGELS PTY LTD (plaintiff) v HENNESSY BUILDING PTY LTD (first defendant) and JOHN PAUL HENNESSY (second defendant) FILE NO: 4121/14 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: District Court DELIVERED ON: 6 December 2017 DELIVERED AT: Brisbane HEARING DATE: 30 November 2017 JUDGE: Reid DCJ ORDER: 1. The plaintiff pay 75 per cent of the defendants’ costs of the application filed on 20 February 2017 and heard on 8 March 2017. 2. Costs of the application filed on 14 June 2017 and heard on 28 June 2017 are reserved. CATCHWORDS: COSTS – where an application for security of costs – whether costs should be costs in the cause COSTS – where an application for threshold issues to be heard separately – whether costs should be reserved Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & Anor [2017] QDC 280 Frigger v Clavey Legal Pty Ltd (No. 2) [2015] WASCA 258 Plyable Pty Ltd & Anor v Go Gecko (Franchise) Pty Ltd & Ors (No. 2) [2016] QSC 256 -- 1 of 7 -- 2 COUNSEL: A Fitzpatrick for the plaintiff P A Travis for the defendants SOLICITORS: Axia Litigation Lawyers for the applicants Aitken Whyte, solicitors for the respondent [1] In this matter I had previously delivered reasons for judgment in respect of two applications (see Chapel of Angels Pty Ltd v Hennessy Building Pty Ltd & Anor [2017] QDC 280). [2] The plaintiff submits that costs of an application filed on 20 February 2017 and heard on 8 March should be costs in the cause. The application was, primarily, related to an application for security for costs. In support of that submission the plaintiff’s counsel referred me to paragraph 28.61 of Law of Costs by G.E. Dal Pont, 3rd edition and an article “Security for Costs – A Practitioner’s Guide” from the Queensland Law Society Journal, June 1990 p 215 ff. She submitted, consistent with those articles, that where a defendant is successful with an application for security for costs, costs of the application are usually reserved or declared costs in the cause. [3] The defendants’ counsel, after the hearing of submissions, provided me with a copy of a decision of Bond J in Plyable Pty Ltd & Anor v Go Gecko (Franchise) Pty Ltd & Ors (No. 2) [2016] QSC 256. [4] In that matter his Honour gives a detailed consideration of the issue. Importantly, after referring to paragraph 28.61 of Law of Costs earlier referred to his Honour says at paragraph 12: “In my view the authority cited by Dal Pont do not establish that there is any particular ‘usual’ approach to the question of the nature of the -- 2 of 7 -- 3 award which should be made in the event of a successful security for costs application. Nor do they provide evidence in support of the proposition the exercise of the costs discretion by reserving costs or making them costs in the cause occurs more frequently than the exercise of the discretion in any other way.” [5] His Honour also referred to a decision of the Western Australian Supreme Court of Appeal in Frigger v Clavey Legal Pty Ltd (No. 2) [2015] WASCA 258 where the court also rejected the notion that it was “normal” to make such an order, accepting however, that such orders were not uncommon. Ultimately the Court of Appeal, and Bond J, accepted the view that there was no “normal” order and that, rather, in each case the judicial discretion to make an appropriate order needed to be made. [6] It is necessary to consider my reasons for making the orders I did in order to properly exercise that discretion. [7] The application for security for costs of both the first and second defendants. It followed an earlier consent order for security for costs of the first defendant only, made at a time before the second defendant was a party to the proceedings. The application also followed amendments to the statement of claim which I concluded were substantial, as explained in my primary judgment. [8] The defendants’ solicitors had sought further security in a letter of 17 January 2017, a month before filing of the application. The letter was a detailed one which clearly identified the reasons why further security was being sought. It set out the additional costs the defendants were said to be likely to incur and had incurred, though as noted in my earlier judgment the estimate was related to the actual costs of the defendant -- 3 of 7 -- 4 and not to an expression of opinion by the defendants’ solicitors as to reasonable standard basis costs. [9] It did assert that on a standard basis assessment “it is foreseeable (the defendants) will recover … no less than 50% of the costs”. The letter sought a total of $69,000 as security, $25,000 for the second defendant and a further $44,000 for the first defendant, and invited the plaintiff to provide evidence of its ability to meet any adverse costs order if it could. [10] The plaintiff’s solicitors’ letter in response denied that the amendments to the statement of claim substantially expanded the plaintiff’s claim, asserting that the addition of the second defendant as a party would not create any extra work and that the defendants’ case was not a strong one. It also sought an itemisation of the defendants’ solicitors’ costs estimation. [11] I do not accept the contention that the amendments to the pleading, including the joinder of the second defendant, would not result in significantly greater work as outlined in my earlier judgment. [12] Although a letter containing some breakdown of the costs calculation was apparently provided by the defendants’ solicitor, I was not provided with that breakdown (see paras 19 to 21 of my earlier judgment). [13] The plaintiff’s solicitors in their letter in response submitted the application for additional security was “a further cash grab”. [14] I do not think that it was. The expansion of the case brought about by the amendments to the statement of claim will inevitably result in additional costs. The response of the plaintiff, and its solicitors, in circumstances where it provided no evidence to -- 4 of 7 -- 5 establish its ability to meet a costs order and did not provide evidence of the financial circumstances of those standing behind the plaintiff company, and made the undertaking to the court in respect of costs referred to in my judgment only during the hearing of the application causes me to conclude its attitude to the defendants’ application was unreasonable. [15] Although, ultimately, an order for security for costs was not made, this was only because of the making of the undertaking. I concluded in my judgment that but for the undertaking I would have ordered security for costs. [16] The only criticism of the defendants’ approach which had any resonance with me was the plaintiff’s reliance on the fact that the defendants had not provided a detailed breakdown of likely costs on a standard basis (see in particular paras 57/58 of my earlier judgment). Ultimately, I did not think that was critical. If it was seen by the plaintiff as a decisive matter it would, in my view, have been appropriate for the plaintiff’s solicitors to have conceded a need to provide further security but have then discussed with the defendants’ solicitors the appropriate amount. [17] In such circumstances I have concluded this is a case where it is appropriate that the plaintiff pay the defendants’ costs of the application for security for costs. [18] The defendants also applied for orders for the provision of further documents in relation to three particular paragraphs of the further amended statement of claim, and to strike out some paragraphs of that pleading. [19] They failed with the strike out application. I did however make orders sought for further disclosure and, ultimately, such disclosure included some documents that might be thought to relate to the issue of when the business might otherwise have opened, and what loss the plaintiff has suffered. -- 5 of 7 -- 6 [20] In my view both those applications were significantly less important than the search for costs issue in the determination of the application of 8 March. They occupied less time and took less work. In circumstances there the plaintiff may in fact be entitled to recover a small amount of the costs of the application, perhaps 10 to 15 per cent in relation to the strike out application I think it appropriate that I order, in all of the circumstances, that the plaintiff pay 75 per cent of the defendants’ costs of and incidental to the application filed on 20 February. [21] In relation to the second application the plaintiff’s who was unsuccessful on the substantive application to have threshold issues heard separately. Its counsel submits I should order that costs of the application be reserved. [22] She submits that the question of whether in fact it would have been best to sever the threshold issue is one best determined by the trial judge since only she or he, having heard all of the evidence at trial, would be able to properly assess the wisdom of such an approach. [23] The defendants’ counsel submits that consistently with r 681 of UCPR, costs should follow the event. He submits that a submission that the trial judge is best placed to determine such matters would apply to all, or nearly all, applications and that not to make the plaintiff pay costs would effectively mean the costs of all applications should be reserved to the trial judge. [24] I do not think that is so. Sometimes, perhaps often, an application judge is best placed to consider the reasonableness of a party’s response to a foreshadowed or actual application. Sometimes a trial judge can be too distant for a proper consideration of such issues. -- 6 of 7 -- 7 [25] I do not think that is the case here. Necessarily, my determination not to allow the severance of the separate issue is based on only an impression of the issues, and the evidence which is likely to be given in the case. I accept that, ultimately, a proper understanding of the evidence and of the issues, which can be best achieved only by a trial judge, might result in the conclusion that, in retrospect, the making of an order such as that sought by the plaintiff would have been worthwhile. [26] In the circumstances I will reserve the costs of the application filed on 14 June and heard on 28 June 2017. -- 7 of 7 --