Australian Photographic Engineering P/L v Dick & Anor (No 2) [2016] QDC 128

DISTRICT COURT OF QUEENSLAND CITATION: Australian Photographic Engineering P/L v Dick & Anor No 2 [2016] QDC 128 PARTIES: AUSTRALIAN PHOTOGRAPHIC ENGINEERING PTY LTD ACN 010 943 021 (plaintiff) v COLIN GEORGE DICK (first defendant) and TERRENCE PAUL MURPHY (second defendant) FILE NO/S: 1562/11 DIVISION: PROCEEDING: Civil Trial ORIGINATING COURT: District Court of Queensland DELIVERED ON: 2 June 2016 DELIVERED AT: Brisbane HEARING DATE: Written submissions to 28 January 2016 JUDGE: Andrews SC DCJ ORDER: 1. Order that the defendants pay the plaintiff’s costs, calculated on the standard basis up to and including 14 August 2012 on the Magistrates Court Scale D; 2. Order that the plaintiff pay the defendants’ costs, including all reserved costs but excluding costs thrown away by the adjournment of the hearing on 18 November 2014 and any costs attributable to attendance at the hearing on 6 August 2014 during the periods from 12.15 pm to 1.00 pm and 2.30pm to 3.00pm or instructions to attend at the hearing during those periods, on the standard basis. -- 1 of 9 -- 2 CATCHWORDS: COSTS – whether appropriate to order on the indemnity basis – whether a successful defendant in the District Court should have costs on the Magistrates Court scale UCPR 1999 r 361 COUNSEL: Stephens for the plaintiff Gunn for the first defendant Erskine for the second defendant SOLICITORS: PPCS Lawyers for the plaintiff Allan R de Brenni & Co for the first defendant Carl Blumen for the second defendant [1] The issue is limited to costs. On 11 December 2015 I published reasons for decision in this proceeding when giving judgment for the plaintiff against the defendants in the sum of $5,431.01 inclusive of interest. [2] On the issue of costs the parties sent to me: 1. plaintiff’s submissions on costs dated 7 January 2016; 2. affidavit of Terence Paul Murphy sworn 8 January 2016; 3. affidavit of Carl Blumen sworn 11 January 2016; 4. second defendant’s submissions on costs, undated; 5. affidavit of Colin George Dick sworn 22 January 2016; 6. affidavit of Allan Raymond de Brenni sworn 22 January 2016; 7. first defendant’s submissions on costs dated 28 January 2016; 8. the plaintiff’s application for costs. [3] The plaintiff seeks orders that: (a) the defendants pay the plaintiff’s costs to and including 10 August 2012; (b) the plaintiff pay the defendants’ costs after 10 August 2012; (c) the costs be assessed on Scale D of the Magistrates Court Scale; (d) the costs of the defendants be reduced by one trial day. First defendant’s application for costs [4] The first defendant (Mr Dick) seeks orders that: (a) The defendants pay the plaintiff’s costs to and including 14 August 2012 on the Magistrates Court Scale D; (b) the plaintiff pay to Mr Dick costs on an indemnity basis and Mr Murphy’s costs on the standard basis, including all reserved costs, calculated after 14 August 2012; or in the alternative (to (b)); (c) the plaintiff pay Mr Dick’s costs and Mr Murphy’s costs, including all reserved costs, calculated on the standard basis after 14 August 2012; and -- 2 of 9 -- 3 (d) Mr John Ackfield pay the costs order made in (b) or (c) to the extent that the plaintiff fails to do so. Mr Murphy’s application for costs [5] The second defendant (Mr Murphy) seeks orders that: (a) the defendants pay the plaintiff’s costs, calculated on the standard basis, up to and including the day of service of the offer namely, 14 August 2012 on the Magistrates Court Scale D; and (b) the plaintiff pay Mr Dick’s costs and Mr Murphy’s costs, including all reserved costs, on the standard basis after 14 August 2012. Offer to Settle [6] On 10 August 2012 the solicitor for Mr Murphy posted a letter to the plaintiff. It contained a letter and an Offer to Settle. So far as is relevant, the letter provided that there was enclosed an “Offer to Settle pursuant to Chapter 9, Part 5 of the Uniform Civil Procedure Rules 1999… on behalf of both defendants…”. The Offer to Settle was on the basis that: 1. … the defendants offer to settle the plaintiff’s claim against the first defendant and against the second defendant for $18,000.00 plus the plaintiff’s costs to be assessed on the Magistrates Court Scale “F” or agreed, in default of agreement within 7 days after the plaintiff’s acceptance the defendants agree to submit to judgment for the plaintiff for the amount of this offer plus party and parties costs to be assessed on the Magistrates Court Scale “F”. 2. This offer is open for acceptance in writing by the plaintiff for 14 days after the service of this offer on the plaintiff. 3. This is an offer to settle all of the plaintiff’s claims against both defendants and the defendants are jointly and severally liable to the plaintiff for the whole of the amount of this offer plus the plaintiff’s costs as agreed between party and party as assessed on the Magistrates Court Scale “F” or agreed. 4. This offer is made pursuant to Chapter 9, Part 5 of the Uniform Civil Procedure Rules.” [7] When was the Offer to Settle served? The plaintiff made submissions on the basis that the offer was made on 10 August 2012. For Mr Murphy, submissions were made on the basis that it was served on 14 August 2012. For Mr Dick, submissions were made on the basis that it was served on 14 August 2012 in one place1 and on 10 August 2012 elsewhere.2 I infer that the offer was served by the plaintiff on 14 August 2012. The plaintiff’s arguments [8] The plaintiff claimed no less than $220,288.49 and interest of $152,050.36 together with costs. The plaintiff’s claim was for an amount within the jurisdiction of the District Court. The plaintiff’s submission that the defendants should have their costs 1 Page 1, para 3(a). 2 Page 3, para 6. -- 3 of 9 -- 4 assessed on Scale D of the Magistrates Court Scale was not accompanied by any argument for the plaintiff or by reference to authority. I reject this submission for the plaintiff. [9] It is appropriate that any order for the plaintiff to pay the defendants’ costs reflect the three features that the defendants litigated in the District Court, that they were obliged to litigate in the District Court because that was the court chosen for this proceeding by the plaintiff, that the defendants successfully obtained a judgment for less than the amount for which they had offered to settle. This approach is consistent with a decision of the Supreme Court of Queensland.3 [10] The plaintiff submitted that the parties should each bear their costs of and relating to the adjournment of the trial so that counsel for Mr Dick could attend a funeral. On 6 August 2014 there was an adjournment from 12.15 pm to 3.00 pm to accommodate the request of counsel for Mr Dick that he be excused to attend a funeral. The hearing otherwise proceeded from 10.03 am until 4.37 pm. The adjournment had the consequence that the lunch break was extended by 75 minutes. If any costs of the defendants are attributable to attendance at the hearing on 6 August 2014 or instructions to attend at the hearing during the periods from 12.15 pm to 1.00 pm and 2.30pm to 3.00pm on that day, they should not be recoverable from the plaintiff and in respect of such costs for those periods each defendant should bear his own costs. [11] The plaintiff submitted that the defendants spent more than one day on the issue of the sequence of the signing of the guarantee and implied that this was an unreasonable period of time bearing in mind that both defendants admitted signing “the credit agreement and guarantee”. The plaintiff submitted that the costs of that issue should not be borne by the plaintiff. If the conduct of the defendants had been unreasonable for devoting so much time to this issue it might be appropriate to exempt some portion of the costs in relation to this particular question from an order that the defendants be paid their costs. However, the issue was an appropriate one to explore because the date of the execution of the guarantee was significant with respect to the calculation of quantum and with respect to the reliability of the memory of the three men who signed the guarantee. I accept that the defendants could have effectively explored that issue more quickly. However, the time taken by the defendants was not unreasonable. It is not appropriate to make a particular order in respect of the costs of this issue. The plaintiff’s costs to 14 August 2012 [12] The parties seem to be agreed on one matter. It is appropriate to order that the defendants pay the plaintiff’s costs, calculated on the standard basis, up to and including 14 August 2012 on the Magistrates Court Scale D.4 Costs of 18 November 2014 [13] There was a hearing on 18 November 2014 which was adjourned on the plaintiff’s application. Counsel for Mr Dick asked that costs of 18 November be reserved. The transcript suggests that I made no order reserving costs. My omission to expressly state whether the costs of that day’s hearing were reserved was a slip. I will treat the costs of that day as if they had been reserved. 3 cf Smith v Topp and Anor [2003] QSC 091 4 Uniform Civil Procedure Rules 1999, r 361(2)(a). -- 4 of 9 -- 5 [14] On 18 November 2014 the matter was listed for the seventh day of trial. However, the hearing that day proceeded for less than 90 minutes before it was adjourned to a date in December. When the matter had been adjourned on 20 August 2014 it was in the contemplation of the three parties and of the court that when the matter next came on for hearing on 18 November 2014, the defendants would have supplied to the plaintiff their outlines of submissions in writing, the plaintiff would have then provided to the defendants the plaintiff’s outline in writing and the defendants would have supplied their replies in writing. It was anticipated that the replies would deal with matters of law but that the court was likely to give liberty to the defendants to include some matters of fact in their written replies. [15] Having received the defendants’ written submissions, the plaintiff supplied its submissions on about 8 October 2014. As the trial had involved about five days of evidence, it is unsurprising that the plaintiff referred to many pieces of evidence throughout the exhibits and transcript and submitted that the court should make many particular findings of fact. Ordinarily, defendants replying to a plaintiff’s submissions have a right of reply on matters of only law and need the court’s leave to reply on matters of fact. Having indicated to the parties that I would not be censorious about the defendants including matters of fact in their replies, the defendants, unsurprisingly, provided replies which included references to parts of the evidence and submissions about factual findings. They included many references. The second defendant’s outline of submissions in reply was dated 13 November 2014 and the first defendant’s was dated 17 November 2014. The matter was listed for 18 November. The plaintiff opposed the defendants’ reliance on their replies because they came so late and contained so many references to evidence and so many submissions on issues of disputed fact. The plaintiff submitted that the plaintiff did not have time to adequately respond. The defendants did not dispute that the plaintiff did not have time to adequately respond. Over the plaintiff’s objection, I allowed the defendants to read their overdue replies. The plaintiff’s counsel accordingly asked for an adjournment to give him sufficient time to respond. It was fair that the plaintiff should have time to respond to the numerous allegations of fact in the particular circumstances of this case. By those circumstances I refer to the ample time that the defendants had to supply their replies to the plaintiff and I contrast that ample time with the relatively short time left for the plaintiff. [16] The fair outcome is that each party should pay its own costs thrown away by the adjournment of the hearing on 18 November 2014 because the plaintiff had been late in supplying its own submissions to the defendants and that the defendants had been even later in supplying their voluminous replies on matters of fact. [17] I make no order as to the costs of the hearing on 18 November 2014, on the basis that each party should pay its or his own costs thrown away by the adjournment of the hearing that day. Reserved costs of hearing before Judge Long SC [18] The defendants applied for summary judgment on 22 December 2011. Judge Long SC heard the application and dismissed it with reasons on 11 May 2012, reserving the costs. His Honour particularly noted a factual dispute arising from affidavit evidence of Mr Ackfield that he told Mr Dick that the guarantee would relate to past debts. Mr Ackfield commendably corrected that version at trial. He made clear at trial that he could not be sure that he had discussed the retrospective operation of the guarantee. -- 5 of 9 -- 6 The plaintiff does not submit that the defendants should not have their reserved costs of the summary judgment application. There is no good reason to exempt those costs of the defendants from the costs which they may recover. Effect of the offer to settle [19] For the second defendant it was submitted that the effect of the offer to settle was an offer under the Uniform Civil Procedure Rules r 361, that the judgment for the plaintiff was not more favourable than the offer, that each of the requirements of the rule was satisfied and that as a result, the court should order that the plaintiff pay the defendants’ costs calculated on the standard basis after the day of service of the offer, namely, 14 August 2012 for an action successfully defended in the District Court. [20] Apart from the specific matters referred to by the plaintiff, the plaintiff did not oppose the notion that it must pay the defendants’ costs calculated on the standard basis after the day of service of the notice. The major point of difference between the plaintiff’s submissions and the second defendant’s submissions was the plaintiff’s submission that the costs be assessed on Scale D of the Magistrates Court Scale. I have rejected that aspect of the plaintiff’s argument. The second defendant’s costs [21] The second defendant, Mr Murphy, is entitled to the order he seeks subject to the matters I have dealt with above. It is appropriate to order that the plaintiff pay the second defendant’s costs, including all reserved costs but excluding costs thrown away by the adjournment of the hearing on 18 November 2014 and any costs attributable to attendance at the hearing on 6 August 2014 during the periods from 12.15 pm to 1.00 pm and 2.30pm to 3.00pm or instructions to attend at the hearing during those periods, on the standard basis. The first defendant’s arguments for indemnity costs [22] A conventional application of UCPR r 361 in the circumstances of this proceeding would be to order that the plaintiff pay Mr Dick’s costs on the standard basis from the date of service on the plaintiff of the defendant’s offer to settle. The rule allows for other orders, if appropriate. Mr Dick’s counsel submitted that indemnity costs are appropriate. Notwithstanding that he accepted that indemnity costs are exceptional and are generally made in response to blameworthy conduct he submitted this was an appropriate occasion. He used at least seventeen arguments. [23] The first was that the offer to settle made on 14 August 2012 should be considered as the equivalent of an offer made nearly two years later, after 4 August 2014. The point of the submission is to give to the Mr Dick the advantage of UCPR r 361(3)(b) so as to persuade me to order that the plaintiff pay indemnity costs. Counsel for Mr Dick, in effect, urged me to ignore the plain words of r 361(3)(b) and r 361(2)(b). I am not persuaded to treat the offer as if it had been served after 4 August 2014. One sub- rule deals with costs incurred after a defendant’s offer to settle is made during a trial. The other sub-rule deals with costs after an offer is made well before trial. I am not persuaded to treat the rule about offers made during a trial as intended to provide a guide for the proper order for costs when a defendant’s offer is served two years before the trial. I am comforted by the fact that a general rule is expressly provided in r 361(2)(b) to cover occasions where a defendant makes an offer earlier than the hearing. -- 6 of 9 -- 7 [24] There were sixteen further arguments for Mr Dick which were on the different basis that they demonstrate blameworthy conduct individually or collectively so as to justify an order that they be calculated on the indemnity basis. [25] Firstly: A reason for dismissing the defendants’ summary judgment application was retracted evidence sworn to by Mr Ackfield, in particular that Mr Ackfield deposed to saying to a defendant that the guarantee was to cover past debts too. I am not satisfied that when Mr Ackfield deposed to that earlier affidavit evidence he was dishonest or that he believed the retracted evidence was crucial to avoid summary judgment. Mr Ackfield’s concession in oral evidence at trial is circumstantial evidence of his honesty generally. Judges routinely reject a witness’s recollection without implying dishonesty or even that the recollection was false. The rejection is commonly because the judge is not sufficiently persuaded of its reliability or of the witness’s credibility. Mr Ackfield retracted his own earlier version because he could not be sufficiently sure of it. He did not suggest that it was false or that he deposed to it dishonestly. He gave evidence years after the alleged conversation. I do not find blameworthy conduct in the plaintiff arising from the reading of that affidavit when resisting summary judgment. [26] Secondly: that the plaintiff, because of Mr Ackfield’s interest as a shareholder and director, preferred to pursue the defendants without seeking a judgment against Mr Ackfield as the third guarantor. I do not regard that as blameworthy conduct. The defendants were at liberty to join Mr Ackfield if they believed they needed a judgment against him to compel him to pay his share of any judgment against them because he is a co-surety. [27] Thirdly: that Mr Ackfield’s insistence that a guarantee was signed in July was incredible and audacious. The implication is that Mr Ackfield acted in wilful disregard of facts known to him. I do not accept that. The events were years before and a draft had been signed by one guarantee in July. The probability is that Mr Ackfield was honest but mistaken about events of years of before. I found at trial that there were occasions when Mr Ackfield, purporting to remember, has incorrectly reconstructed history, as he imagined it to have been. I did not find that Mr Ackfield was dishonest. I reject that the Mr Ackfield or the plaintiff were blameworthy for maintaining incorrectly that the guarantee in the plaintiff’s possession was signed in July. [28] The fourth argument rephrased the criticism that Mr Ackfield reconstructed a conversation about past debts. I do not regard his reconstruction as wilfully dishonest. Reconstruction of conversations which occurred years before is a process regularly undertaken by honest people and is regularly unreliable. [29] Fifthly: the plaintiff persisted with an argument that paperwork signed in July was signed in September and that paperwork signed in September was signed in July. I regard that as being the result of an honest but mistaken belief of Mr Ackfield. [30] Sixthly: that the plaintiff unnecessarily prolonged the trial by seeking to rely upon an agreement arising from a signature on a credit application. I reject the implied submission that this was blameworthy. I regard the plaintiff’s case that the credit application may have created a liability in Mr Dick independently of the guarantee was arguable. The plaintiff’s counsel’s inventive argument that its case was not -- 7 of 9 -- 8 statute barred was rejected. The rejection of counsel’s submission does not warrant a finding that the plaintiff is blameworthy. [31] Seventhly: Mr Ackfield’s evidence that the plaintiff continued to supply goods on credit after July 2006 was rejected. That does not make the plaintiff’s conduct blameworthy. Mr Ackfield was not found to have wilfully manufactured his memory of events which occurred eight years before the trial. [32] Eighthly: that the plaintiff could not have sensibly argued for its construction of the guarantee. The submission misstates a passage from the judgment. I regard the plaintiff’s argument about the construction of the guarantee as arguable, unattractive and not blameworthy. [33] Ninthly: that the plaintiff should not have argued that the guarantee was not ambiguous. I reject that. The plaintiff’s contention was arguable notwithstanding that it was rejected. Independently of that conclusion of mine, the plaintiff’s conduct was not blameworthy because its counsel made submissions that the guarantee was not ambiguous. [34] The tenth argument was that the plaintiff made another unarguable proposition by arguing a pleading point about the construction of the defendant’s pleadings. It was not blameworthy conduct even though the argument was rejected. [35] The eleventh point was somewhat like the sixth in that the plaintiff’s submissions to the effect that the defendants were personally parties to a credit application was nonsense. I reject this submission for Mr Dick. I regarded the plaintiff’s submission as arguable and sensible. [36] The twelfth argument had to do with my rejecting at paragraph 91 of my reasons a submission made by the plaintiff’s counsel. Counsel for Mr Dick did not submit that the plaintiff’s submission had been improperly made. I reject the implication that it leads to an inference that the plaintiff is blameworthy. [37] The thirteenth argument is to the effect that Mr Ackfield should have known his case was weak because invoices disclosed by the plaintiff were marked “PAID”. Mr Ackfield had another set of invoices which did not bear that marking. There was no complete exploration in evidence as to how that “PAID” marking arose. Perhaps they were paid and perhaps they were not. It is plausible that the marking arose by mistake and that “PAID” did not mean that the invoices had been paid. Unfortunately for the plaintiff, it carried the onus of proof. As a consequence the failure to adequately explain this in evidence at trial was to the plaintiff’s disadvantage because it carried the onus of proof. I do not accept that Mr Ackfield should have known to adjust the plaintiff’s claim to exclude claims for any invoice marked “PAID”. [38] The fourteenth argument is that the judgment sum of $3,080 was a sum accepted by the defendants to have been owing. The submission does not explain how it is that the plaintiff is culpable because of this. I do not accept that this argument is relevant to indemnity costs. [39] The fifteenth argument is that one of the invoices in evidence was “atypical”. It was submitted that from this I should conclude that Mr Ackfield was preferring the plaintiff and himself to the defendants. I do not conclude that from the invoice. The -- 8 of 9 -- 9 fact that Mr Ackfield may have preferred himself and the plaintiff to the defendants is not blameworthy conduct. I reject this argument as a basis for indemnity costs. [40] The sixteenth argument was to the effect that Mr Ackfield tended to recall past history in a way which favoured his company. I reject the implication that he did so dishonestly. [41] Individually, the arguments are unpersuasive. I must consider all seventeen together as counsel requested. Considered as ‘a multiple warhead’, using one of the many enjoyable expressions in counsel’s outline, they fail to launch. [42] I reject Mr Dick’s application for indemnity costs. Should there be an order that Mr Ackfield pay costs in the event that plaintiff fails to pay? [43] Mr Dick applied for an order that Mr Ackfield pay Mr Dick’s costs in the event that the plaintiff does not. Mr Dick’s counsel made no reference to authority. Ideally and ordinarily, applications by a defendant for security for costs to be provided by a party’s director or shareholder are made early in the history of a proceeding and the prospects of obtaining an order are somewhat prejudiced by lateness. There is usually a need to prove a risk that costs will not be paid by the plaintiff. There is no explanation for the late application. There is no evidence of risk that the plaintiff is impecunious. I do not propose to explore the law on exceptional cases to determine whether costs may be ordered at the end of this proceeding against Mr Ackfield because he has been a director or shareholder of the plaintiff. I reject this application too. Conclusion on the first defendant’s arguments as to costs [44] I reject the first defendant’s primary applications for his costs on the indemnity basis and for Mr Ackfield to be ordered to pay costs. For Mr Dick there was an alternative, conventional but persuasive submission that he have his costs, including reserved costs on the standard basis after 14 August 2012. Subject to the exceptions I referred to when dealing with Mr Murphy’s application for costs, that application by Mr Dick should succeed. [45] Accordingly, it is appropriate to make orders that the plaintiff pay the first defendant’s costs in terms similar to those of the order for the second defendant’s costs. -- 9 of 9 --