Commissioner of Taxation v Croft & Anor (No 2) [2016] QSC 283

SUPREME COURT OF QUEENSLAND CITATION: Commissioner of Taxation v Croft & Anor (No 2) [2016] QSC 283 PARTIES: COMMISSIONER OF TAXATION (plaintiff) v STEVEN WILLIAM CROFT (first defendant) and ANNE MAREE CROFT (second defendant) FILE NO: No 1203 of 2015 DIVISION: Trial Division PROCEEDING: Trial DELIVERED ON: 5 December 2016 DELIVERED AT: Brisbane HEARING DATE: Written submissions on 29 August 2016 and 8 September 2016 JUDGE: Jackson J ORDERS: The defendants pay the plaintiff’s costs of the proceeding. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where judgment was entered for the plaintiff and the defendants’ counterclaim was dismissed – where the defendants were unsuccessful on all issues raised – whether costs should follow the event Uniform Civil Procedure Rules 1999 (Qld), r 681 COUNSEL: NM Cooke for the plaintiff L Harrison QC for the defendants SOLICITORS: McInnes Wilson Lawyers for the plaintiff Deacon & Milani Solicitors for the defendants [1] Jackson J: On 26 August 2016, I gave judgment that the defendants pay the plaintiff the sum of $1,262,444.93 and dismissed the defendants’ counterclaim. The question of costs remains. -- 1 of 2 -- 2 [2] The plaintiff applies for an order that the defendants pay the plaintiff’s costs of the proceeding. The defendants apply for an order that there should be no order as to costs of the proceeding. [3] The defendants submit that there were five issues raised in the proceeding. First, the plaintiff did not have power to enter into the Deed of Agreement and Deed of Guarantee and Indemnity. Second, the Deed of Agreement, Deed of Guarantee and Indemnity and Deed of Variation Number 5 were entered into by persons without authority. Third, there was an implied term of the contracts that the plaintiff would not hinder the performance by the defendants of their obligations under the Guarantee. Fourth, the plaintiff breached that term in seeking to obtain payment and receiving payment from Mitsubishi under a garnishee notice. Five, Deed of Variation Number 5 was not concluded as a contract binding on the plaintiffs and defendants. [4] The defendants submit that the plaintiff succeeded on the second issue on a point that was not raised by the plaintiff. The defendants submit that accordingly the plaintiff should not get the costs of the proceeding. [5] On that issue, I determined that the plaintiff had ratified the contracts according to the usual principles of agency by being substituted as plaintiff and by pursuing the claim in the present proceeding.1 [6] The defendants rely on three cases that illustrate that the court has power, and in some circumstances it is appropriate, to make an order as to costs that will reflect the success of the parties on different issues in the proceedings as separate “events”.2 [7] However, the defendants did not succeed on any of the five issues that it identifies. The substance of their submission is that they failed on the second issue because of a legal analysis in the reasons for judgment as to the effect in law of the plaintiff being joined as a plaintiff to the proceeding and the consequence of that fact for the defendant’s argument that the plaintiff’s agents who made the contracts lacked authority. They submit that had the plaintiff not succeeded on this point not directly raised, the defendants would have been successful overall in the proceeding. Accordingly, they submit that the plaintiff should be deprived of an order for costs following the event either in relation to the whole of the proceeding or in relation to the question of whether the contracts were entered into by persons without authority. [8] In my view, none of the cases relied upon suggests that it would be appropriate to conclude in these circumstances that there should be no order as to costs under r 681 of the Uniform Civil Procedure Rules 1999 (Qld). [9] In my view, given that the defendants were unsuccessful on all of the relevant issues, and the plaintiff was the successful party in the proceeding, the appropriate order is that the costs of the proceeding should follow the event. The defendants should pay the plaintiff’s costs of the proceeding. 1 Commissioner of Taxation v Croft & Anor [2016] QSC 190, [65]. 2 Uniform Civil Procedure Rules 1999 (Qld), rr 681 and 684; Interchase Corporation Ltd (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 3) [2003] 1 Qd R 26; Mio Art Pty Ltd v Mango Boulevard Pty Ltd (No 3) [2013] QSC 95; Mosman Services Pty Ltd v McDonald (No 2) [2013] QSC 217. -- 2 of 2 --