Base 1 Projects Pty Ltd v Islamic College of Brisbane Ltd [2011] QCA 333

[2011] QCA 333 COURT OF APPEAL WHITE JA Appeal No 8859 of 2011 SC No 745 of 2011 BASE 1 PROJECTS PTY LTD Appellant and ISLAMIC COLLEGE OF BRISBANE LIMITED Respondent BRISBANE DATE 23/11/2011 JUDGMENT WHITE JA: On 5 September this year a Trial Division Judge ordered that Base 1 Projects Pty Ltd provide security for the costs of its proceedings against the Islamic College of Brisbane Limited in the amount of $90,000 up to and including the first day of trial. The proceedings arise out of a contract for the construction of a multi-purpose hall for the College. Base 1 Projects filed an appeal against that order on 3 October. The Islamic College filed an application for security for the costs of the appeal on 13 October. At the hearing of the Islamic College's application on 20 October 2011the parties reached an agreement in these terms: Upon the second defendant by counterclaim, Emile Paul Francis Zwetsloot, undertaking to: (a) execute and return to the defendant's solicitors a mortgage in registrable form (to be prepared by the defendant's solicitors within seven days) within 48 hours of it being provided to his solicitors charging his home unit being Title Reference [the unit] to the extent of $23,170 as security for the defendant's -- 1 of 5 -- 2 costs of the appeal; and (b) not further charge or encumber the unit beyond the amount to which it is encumbered today including, but not limited to, taking further advances, draw- downs or howsoever otherwise on existing securities over the unit, by consent the application was dismissed and the costs of that application were reserved. At that hearing it was stated that there was a caveat over the property lodged by an entity named Allfix Fasteners to secure a debt which was owed to it by an entity for which Mr Zwetsloot was responsible and that Mr Zwetsloot was able to pay out the amount, which was, relatively speaking, the modest sum of about $8,000, in order to free the title so that the mortgage could be registered second in priority to the first mortgagor, the bank. A statement to that effect had also been made before Justice Ann Lyons in the Trial Division when the application for security for costs was originally made. The hearing on the 20th of October must be seen against the background of the appeal directions which had been communicated to the parties by the Registrar, Appeals, by letter dated 5 October, which required the filing of the outline of submissions by the end of October by the appellant, Base 1 Projects. It was extended by a few days so that, in fact, it was filed on 5 November. The outline from the Islamic College was due on 25 November as a consequence, together with its response to the draft index for the appeal record, the index of which was to be settled and returned by 2 December. The mortgage document which was referred to in the undertakings given on 20 October was delivered to Base 1 solicitors on 26 October. There was then some correspondence on 1 November noting that that mortgage had not been returned and also noting that the caveat in favour of Allfix Fasteners was still registered on the title, which would necessarily prevent registration of the mortgage. -- 2 of 5 -- 3 The College threatened to lodge a caveat to protect its interests and to commence proceedings to enforce the caveat. The executed mortgage was delivered by Mr Zwetsloot on 2 November. The next day the College notified Base 1 that although it had the mortgage as executed it could not be registered because the caveat in favour of Allfix Fasteners still remained on the title. There was no response to that letter and on 7 November a caveat was lodged by the College to protect its interests in respect of the unregistered mortgage. On 9 November the College wrote again to Base 1 Projects indicating not only that it had lodged the caveat, but that it intended to make an application to this Court in respect of the security for costs of the appeal. On 15 November counsel for both parties spoke in an attempt, as Mr Matthews expressed it in his submissions, to ward off the application. There was communication between the solicitors in the afternoon of 15 November indicating that Mr Zwetsloot was “doing his best” to pay Allfix Fasteners. On 16 November while the principal debt to Allfix was notified as having been paid the caveat still was not withdrawn. The problem seemed to be that there were outstanding and substantial costs yet to be paid in respect of Allfix's caveat. Mr Zwetsloot has deposed that he had thought only the principal debt was the sticking point and was not aware of the outstanding costs. That is unfortunate, but it really does not go to the principal issue - the caveat still remained and there was, therefore, an inability to lodge the mortgage in favour of the College. On 17 November the solicitor for Base 1 Projects wrote saying that everything had been done that could be done. The caveat still had not been withdrawn so the application was filed at 1.15 in the afternoon. The caveat was noted as having been finally withdrawn at about the same time. -- 3 of 5 -- 4 This application has been brought on because both parties are of the view that they are entitled to the costs of and incidental to the application which was filed by the College on 17 November. That application sought orders that the caveat be withdrawn; in default, that the appeal stand dismissed. The relief sought in the application is no longer necessary given that what it sought has occurred. The College submits that Base 1 has been given every opportunity to bring about the state of affairs which now exists and that Base 1 Projects ought to have acted more promptly given that the timetable for the appeal was running. All this is most unfortunate as costs have been incurred without, it might be thought, much to show for it. Base 1 Projects has allowed matters to run on and, as I have said, that has to be seen in the context of complying with the directions with respect to the appeal. Costs are being incurred by the Islamic College with respect to the appeal, the very point of having security for the costs of the appeal in place. Notwithstanding reassurances emanating from Base 1 Projects side the past did not, one would think, encourage the Islamic College to think that things would come to fruition appropriately. It was not unreasonable of the College to prepare for this application in that context. Mr Zwetsloot seems to labour under the misapprehension that it is the filing of the application and supporting material which incurs the costs and had the application been held back by even an hour it would have been unnecessary and no costs would have been incurred. Nothing could be further from the truth. He himself will know from his own solicitor's bills that it is the work leading up to the appearance in Court which is the most costly part of any of these applications. Against a background of all that had occurred in my view it was not unreasonable to prepare for this -- 4 of 5 -- 5 application. There are no extra costs in filing an application. There would, of course, be costs had counsel been briefed to appear, but even some of those costs could have been spared had the true position been recognised. It would have been unnecessary actually to appear here today. In all of those circumstances I am of the view that Base 1 Projects must pay the costs of and incidental to this further application to enforce the consent order and undertakings that were given on 20 October of and incidental to that application on the standard basis. -- 5 of 5 --