Davis v Perry O'Brien Engineering Pty Ltd (No 2) [2016] QSC 285

SUPREME COURT OF QUEENSLAND CITATION: Davis v Perry O’Brien Engineering Pty Ltd (No 2) [2016] QSC 285 PARTIES: ROY STEVEN DAVIS and COLLEEN JOYCE DAVIS (applicants) v PERRY O’BRIEN ENGINEERING PTY LTD ACN 077 375 207 (respondent) FILE NO: SC No 5928 of 2016 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 5 December 2016 DELIVERED AT: Brisbane HEARING DATE: On the papers JUDGE: Applegarth J ORDER: 1. The plaintiffs pay the first defendant’s costs of and incidental to the hearing on 5 August 2016 in respect of the originating application filed 16 June 2016, including the costs reserved by the order made on 23 June 2016, to be assessed on the standard basis. 2. The plaintiffs pay the first defendant’s costs of and incidental to the application for costs filed 24 October 2016, to be assessed on the standard basis. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INTERLOCUTORY PROCEEDINGS – where applicants applied for a declaration of trust and were unsuccessful – where the originating application was, in substance, an application for summary judgment – where the respondent was wholly successful in defending that application – where respondent had contended at an early stage that the proceeding should continue as if commenced by claim, and such an order was made – whether costs should reflect the respondent’s success on the contested hearing – whether costs should be reserved Uniform Civil Procedure Rules 1999 (Qld), r 698 State of Qld v Litz [1993] 1 Qd R 343 -- 1 of 4 -- 2 State of Qld v Nixon [2002] QSC 296 COUNSEL: N H Ferrett for the applicants P D Tucker for the respondent SOLICITORS: Project Legal for the applicants Shand Taylor for the respondent [1] In a judgment delivered on 2 September 2016,1 I: (a) declined to grant the declaration sought by the applicants in paragraph 1 of the originating application filed 16 June 2016; and (b) ordered that the proceeding continue as if commenced by way of claim. I directed the parties to confer for the purpose of resolving or narrowing the issues in dispute and agreeing steps for the just and expeditious resolution of the real issues at a minimum of expense. I reserved the question of costs, but indicated that I expected the parties to resolve the issue of costs without the need for a further hearing. The parties were able to agree directions, but have been unable to agree on an appropriate costs order. The respondent seeks its costs, and the parties are agreed that the respondent’s application for costs can be decided without an oral hearing. Submissions [2] The respondent relies upon the success which it enjoyed on the issues which I was required to decide. Two substantial issues arose for determination. The first was whether cl 2.2 of the Deed created a trust in favour of the applicants in relation to the “Stock Sale Proceeds”. That issue might have awaited a trial. However, the applicants pressed for a declaration and were unsuccessful. [3] The second substantial issue was whether the respondent was entitled to raise an equitable set-off in response to the applicants’ money claim. That involved two subsidiary issues, both of which were decided in the respondent’s favour. They related to the ability of the respondent to rely upon certain warranties and whether the respondent’s claims gave rise to an equitable set-off. [4] The respondent submits that costs should “follow the event”, and reflect the fact that the issues that were argued before me were all resolved in its favour. The respondent further submits that the applicants should pay its costs because the order that the proceeding continue as if started by claim was the course immediately advanced by the respondent’s lawyers after service of the originating application. This suggestion was declined by the applicants. Ultimately, the respondent submits that, having been forced into defending, successfully, an application which, in substance, was in the nature of an application for summary judgment, the applicants should be ordered to pay to it its costs of and incidental to the hearing on 5 August 2016, including the costs reserved by the order made on 23 June 2016. 1 Davis v Perry O’Brien Engineering Pty Ltd [2016] QSC 202. -- 2 of 4 -- 3 [5] In response, the applicants submit that costs should be reserved to be determined as part of the order for costs made by the trial judge in the proceeding. This course is said to be supported by rule 698 of the Uniform Civil Procedure Rules 1999 (Qld), which provides that where costs are reserved in an application in a proceeding, reserved costs follow the event, unless the court orders otherwise. [6] Next, the applicants submit that as the originating application was in the nature of a summary judgment application, the usual order in unsuccessful summary judgment applications is that the costs of the application should be reserved or made the parties’ costs in the cause. Decision [7] Costs are a matter of discretion, but follow the event unless the Court orders otherwise. As my reasons of 2 September 2016 indicate, I reserved the costs not so that they might be decided by a trial judge, but so that the parties could attempt to resolve that issue, without the need for a further hearing on the question of costs. [8] I am not persuaded that the costs incurred by the respondent in successfully resisting the orders which the applicants sought should be reserved to the trial judge. The applicants were unsuccessful in their applications before me. This was because the legal issues which I was required to decide about whether a trust was created, whether the respondent could enforce certain promises and whether there was an equitable set-off were decided against them. Any future determination by a trial judge of factual issues concerning claims and counter-claims will not alter the issues which I was required to decide. This is not a case in which summary judgment was declined because factual issues were raised by the respondent or factual assertions were made by a deponent whose credibility and reliability in relation to such sworn evidence might be rejected at a subsequent trial of those factual issues. [9] The respondent is correct to submit that the matters of substance decided by me were all decided in its favour. Any order for costs should reflect the substantial success which the respondent achieved. [10] Next, to the extent that the application might be said to resemble an application for summary judgment, there are no hard and fast rules as to the appropriate order when an application for summary judgment is declined.2 Whilst the costs of summary judgment applications are sometimes reserved or made the parties’ costs in the cause to await the ultimate decision on questions of fact or law, it is otherwise where the applicant for summary judgment ought reasonably to have appreciated that the application would fail.3 [11] In this matter one is not concerned with an application for summary judgment which was declined because a respondent made assertions of fact which might be subsequently discredited and ascertained to be unfounded at a trial. In this case the applicants tried and failed to obtain a declaration of trust. The respondent was also successful in relation to the other two issues which were determined by me. 2 State of Qld v Nixon [2002] QSC 296 concerned an actual application for summary judgment where r 299 may apply; and see, for example, State of Qld v Litz [1993] 1 Qd R 343 where an unsuccessful applicant for summary judgment was ordered to pay costs. 3 State of Qld v Nixon [2002] QSC 296 at [7]. -- 3 of 4 -- 4 [12] The respondent was put to the costs of preparing to meet the application. The order for costs should reflect its success. The respondent sensibly proposed that the proceeding be advanced in the normal way, and did so shortly after the respondent was served. If the applicants had agreed to this course then the short hearing on 23 June 2016 and the substantial hearing on 5 August 2016 could have been avoided. [13] The parties have been unable to agree an order in respect of those costs. It is appropriate that those costs be decided by me, rather than reserved. The appropriate order is that the respondent have an order for costs in its favour to reflect its success. The appropriate order is that the applicants pay to the respondent its costs of and incidental to the hearing on 5 August 2016 in respect of the originating application filed 16 June 2016, including the costs reserved by the order made on 23 June 2016, to be assessed on the standard basis. [14] The respondent has also been successful in respect of its application for costs. Therefore, there should be a further order that the applicants pay the respondent’s costs of and incidental to the application for costs. The proceeding having now been reconstituted with the relevant parties being named as the first plaintiff, the second plaintiff and the first defendant, the orders will be: 1. The plaintiffs pay the first defendant’s costs of and incidental to the hearing on 5 August 2016 in respect of the originating application filed 16 June 2016, including the costs reserved by the order made on 23 June 2016, to be assessed on the standard basis. 2. The plaintiffs pay the first defendant’s costs of and incidental to the application for costs filed 24 October 2016, to be assessed on the standard basis. -- 4 of 4 --