Capita Finance Pty Ltd v First Mortgage Company Home Loans & Anor [2017] QDC 37

DISTRICT COURT OF QUEENSLAND CITATION: Capita Finance Pty Ltd v First Mortgage Company Home Loans & Anor [2017] QDC 37 PARTIES: CAPITA FINANCE PTY LTD ACN 055 056 034 (plaintiff) v FIRST MORTGAGE COMPANY HOME LOANS PTY LTD ACN 104 268 448 (first defendant) and AUSTRALIAN FINANCIAL LOAN MANAGEMENT PTY LTD ACN 069 311 486 (second defendant) FILE NO/S: 2045/14 DIVISION: Civil PROCEEDING: Application for Costs ORIGINATING COURT: District Court at Brisbane DELIVERED ON: 27 February 2017 DELIVERED AT: Southport HEARING DATE: On the papers JUDGE: Muir DCJ ORDER: 1. The plaintiff pay the first defendant’s costs of the proceeding including the third party proceeding and reserved costs, up until 6 July 2016 and from 7 July 2016, on the indemnity basis. 2. The plaintiff pay the second defendant’s costs of the proceeding including the third party proceeding and reserved costs. 3. There be liberty to the second defendant to apply to the registrar or court for an order pursuant to UCPR r 676. CATCHWORDS: COUNSEL: Mr N Ferrett for the plaintiff Mr M Long for the first defendant Mr C Wilson for the second defendant -- 1 of 6 -- 2 SOLICITORS: Romans & Romans Lawyers for the plaintiff In-house representative for the first defendant Forbes Dowling Lawyers for the second defendant [1] On 22 December 2016, I made orders summarily disposing of the plaintiff’s claim against the first and second defendants.1 The parties were given an opportunity to file written submissions as to costs. These are the reasons for the costs orders. [2] The first defendant seeks orders that: (a) the plaintiff pay the first defendant’s costs of the proceeding, including the claim, the third party notice filed 1 July 2014, the application filed 10 November 2016 and any reserved costs to be assessed up until 15 January 2016 on the standard basis and from 16 June 2016 on the indemnity basis; (b) the plaintiff pay the second defendant’s costs of the proceeding, including the claim, the third party notice filed 1 July 2014, the application filed 10 November 2016 and any reserved costs to be assessed on the standard basis. [3] The first defendant submits in the alternative that if it is ordered to pay the second defendant’s costs of the third party proceeding, the plaintiff should be ordered to indemnify the first defendant with respect to those costs. [4] The second defendant agitates that the appropriate orders for costs are: (a) the plaintiff pay the second defendant’s costs of the proceeding, including costs of the application and reserved cost to be assessed on the standard basis; (b) the first defendant pay the third party’s costs of the third party proceedings including reserved costs to be assessed on the standard basis; and (c) that there be liberty to the second defendant to apply to the registrar or court for an order pursuant to UCPR r 676. [5] The plaintiff contends that there should be no order as to costs. [6] Before I turn to consider the circumstances of this case it is necessary to consider the relevant legislation and rules governing my discretion to award costs. [7] The power to order costs in this court is conferred by s 15 of the Civil Proceedings Act 2011 (Qld) as follows: “A court may award costs in all proceedings unless otherwise provided.”2 [8] UCPR rr 680 and 681 are relevant. These rules provide: “680 Entitlement to recover costs A party to a proceeding can not recover any costs of the proceeding from another party other than under these rules or an order of the court. 681 General rule about costs 1 Capita Finance Pty Ltd v First Mortgage Company Home Loans & Anor [2016] 350. 2 The definition in s 5 of this Act includes the District Court. -- 2 of 6 -- 3 (1) Costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court orders otherwise. (2) Subrule (1) applies unless these rules provide otherwise.” [9] UCPR r 686(a) provides that costs may be assessed without an order for assessment having been made if the court orders a party to pay another party’s costs. In other words it is not necessary to seek an order that costs be assessed.3 [10] Further, UCPR r 702(1) expressly provides that “[u]nless these rules or an order of the court provides otherwise, a cost assessor must assess costs on the standard basis”. Again it is unnecessary to seek an order that costs be assessed on the standard basis.4 [11] UCPR r 678 applies Ch 17A to costs payable under an Act, these rules or an order of the court. UCPR r 679 provides the following relevant definitions for Ch 17A: “assessed costs means costs and disbursements assessed under this chapter … costs of the proceeding mean costs of all the issues in the proceeding and includes— (a) costs ordered to be costs of the proceeding; and (b) costs of complying with the necessary steps before starting the proceeding; and (c) costs incurred before or after the start of the proceeding for successful or unsuccessful negotiations for settlement of the dispute.” Should costs follow the event? [12] In support of its contention that the Court should “order otherwise” under UCPR r 681, the plaintiff points to the defendants having waited until the matter was ready for trial before applying for summary judgment on a legal point which they ought to have taken much earlier. This conduct of the defendants is said to have caused the unsuccessful plaintiff the unnecessary incurring of expense such that it justifies a departure from the general rule. This submission is rejected. [13] UCPR r 293 expressly provides that an application for summary judgment may be made “at any time” after the filing of a notice of intention to defend. [14] The proceedings were commenced on 30 May 2014. The plaintiff filed its third amended statement of claim on 5 July 2016. On 25 October 2016, the plaintiff served a request for a trial on the defendants, with a time estimate for the trial of two days. The applications for summary judgment were then made by the defendants. [15] The material facts relied upon by the plaintiff to support its contention that it had a genuine and substantial commercial interest were never pleaded by it. The contention that the plaintiff’s argument was confined to it having the same shareholder as 3 See the discussion in Mio Art Pty Ltd v Macequest Pty Ltd & Ors No. 2 [2013] QSC 271 at [11] per Jackson J. 4 See Mio Art Pty Ltd v Macequest Pty Ltd & Ors No 2 [2013] QSC 271 at [12] per Jackson J. -- 3 of 6 -- 4 Oneport was really only developed in the lead up to the summary judgment and at the hearing. [16] There was no evidence before me of any of the costs incurred by the plaintiff in preparing for trial. On the plaintiff’s estimate for the length of the trial, the defendants, by bringing their summary judgments, saved the plaintiff at least the costs of one day in court. [17] The plaintiff was entirely unsuccessful. In the present circumstances, I consider that costs should follow that event. Indemnity Costs – Calderbank Offer [18] On 15 June 2016, the first defendant’s solicitors sent the plaintiff’s solicitors a Calderbank offer on the basis that the claim against the first defendant be dismissed and that there be no orders as to costs.5 The offer was couched in terms that the plaintiff had no real prospects of succeeding on all or part of its claim and that there was no need for a trial of the claim. [19] The first defendant contends an entitlement for part of its costs to be on the indemnity basis because: (a) it bettered its offer of 15 June 2016; and (b) the plaintiff has acted unreasonably in maintaining the effectiveness of the assignment on which it relied. [20] The plaintiff points to there being a real and unusual point raised for resolution by the court and that in such circumstances the refusal of an offer to settle ought not to form the basis of an award of indemnity costs. [21] The plaintiff contends that whilst an imprudent refusal of an offer may warrant such an order, such orders are not made lightly and that some special factor taking the case out of the ordinary must be identified. [22] In Mizikovsky v Queensland Television Ltd,6 the Court of Appeal discussed the circumstances in which a court will order indemnity costs where reliance is placed on a Calderbank offer rather than an offer made under the UCPR, as follows: “[50] …The appellant did not contest the respondent’s submission that the primary judge made the order for indemnity costs in the exercise of the discretion under rr 681 and 703 of UCPR. Rule 681 provides that “costs are in the discretion of the court but follow the event, unless the court orders otherwise”. Rule 703 empowers the court to order costs to be assessed on the indemnity basis. [51] The appellant argued that the trial judge, having found that it was not unreasonable for the appellant to reject the offer, misdirected herself in ordering the assessment of the respondents’ costs on an indemnity basis on the ground that it would have been reasonable for the appellant to have accepted the offer. The appellant submitted that Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd established that assessment on an indemnity basis should not be ordered on the ground that the plaintiff did not obtain a judgment 5 An offer made pursuant to the principles set out in Calderbank v Calderbank [1975] 3 All ER 333. 6 [2013] QCA 68. -- 4 of 6 -- 5 as favourable as the defendants’ offer in the absence of any element of unreasonableness by the plaintiff in not accepting the offer. The respondents relied upon Sultana Investments Pty Ltd v Cellcom Pty Ltd (No 2) and Emanuel Management Pty Ltd (in liq) v Foster’s Brewing Group Ltd for their contrary argument that the making of an offer ‘is a very relevant circumstance’ and, if no countervailing circumstances are raised, ‘the order for indemnity costs is likely to be made’. [52] Sultana Investments Pty Ltd v Cellcom Pty Ltd (No 2) concerned a Calderbank offer. White AJA (with whose reasons McMurdo P and Holmes JA agreed) observed in that respect that in the case of a Calderbank offer the courts are ‘inclined to the award of indemnity costs as an incentive to parties to consider seriously offers to settle which are reasonably made’. The respondents and the appellant agreed in their submissions that the respondents’ offer in this case was not expressed to be a Calderbank offer and that it should not be treated as such an offer. Emanuel Management Pty Ltd (in liq) v Foster’s Brewing Group Ltd, which was approved in Sultana Investments Pty Ltd v Cellcom Pty Ltd (No 2), also concerned a Calderbank offer. It is distinguishable on the further ground that Chesterman J found that the plaintiffs prosecuted their case when they should have appreciated that it had no worthwhile prospects of success, and that finding informed his Honour’s further finding that it was unreasonable for the plaintiffs not to accept the first defendant’s Calderbank offer. … [54] In Velvet Glove Holdings Pty Ltd v Mount Isa Mines Ltd, the relevant principle was stated as being that ‘… a party who unreasonably refuses to accept a Calderbank offer, on terms more favourable than the court’s subsequent order, may be ordered to pay indemnity costs’.” [23] The plaintiff ran an argument unsupported by any authority. The plaintiff has described the point as both an exotic and baroque one. [24] In my view the plaintiff’s argument is best described as a weak one. I find that it was unreasonable for it not to have accepted the offer. It is appropriate that the first defendant obtain an order for its costs on the indemnity basis, from the date when the offer expired on 6 July 2016, and not the date of the offer, as was contended for by the first defendant. Third party costs [25] The second defendant contends that the first defendant ought to pay the third party’s costs of the third party proceedings including reserved costs to be assessed on the standard basis. The first defendant contends that given that the conduct of the third party claim was a very small part of the overall litigation, rather than make this order and then order that the plaintiff indemnify the first defendant with respect to those costs, it is appropriate that there be one order resolving the first defendant’s entitlement to costs. -- 5 of 6 -- 6 [26] The plaintiff, by its written submissions, does not (apart from contending that there be no order as to costs) make any submissions in relation to the costs of the third party proceedings. [27] In the present case, I accept that that the third party costs appear to be minimal. In the exercise of my discretion to order costs, I consider it appropriate that there be one order resolving the first defendant’s entitlement to its costs. Security for costs order – liberty to apply [28] On 21 November 2014, the plaintiff was ordered to provide security for the second defendant’s costs in the sum of $25,000.00. The second defendant seeks liberty to apply to the Registrar or Court for an Order pursuant to UCPR r 676. This rule provides: “(1) This rule applies if, in a proceeding, security for costs has been given by a party under an order made under this chapter. (2) If judgment is given requiring the party to pay all or part of the costs of the proceeding, the security may be applied in satisfaction of those costs. (3) However, the security must be discharged— (a) if a judgment is given which is not within subrule (2); or (b) if the court orders the discharge of the security; or (c) if the party entitled to the benefit of the security consents to its discharge; or (d) in relation to the balance after costs have been satisfied under subrule (2).” [29] The plaintiff does not oppose the order sought by the second defendant. In the circumstances, I am prepared to make such an order. Orders [30] Upon the above analysis, I make the following orders as to costs: 1. The plaintiff pay the first defendant’s costs of the proceeding including the third party proceeding and reserved costs, up until 6 July 2016 and from 7 July 2016, on the indemnity basis. 2. The plaintiff pay the second defendant’s costs of the proceeding including the third party proceeding and reserved costs. 3. There be liberty to the second defendant to apply to the registrar or court for an order pursuant to UCPR r 676. -- 6 of 6 --