Adbri Masonry Pty Ltd v Redback Garden Centre Pty Ltd & Anor [2011] QDC 213

DISTRICT COURT OF QUEENSLAND CITATION: Adbri Masonry Pty Ltd v Redback Garden Centre Pty Ltd & Anor [2011] QDC 213 PARTIES: ADBRI MASONRY PTY LTD (Plaintiff) AND REDBACK GARDEN CENTRE PTY LTD & ANOR (Defendants) FILE NO/S: D1537/11 DIVISION: PROCEEDING: Application for judgment ORIGINATING COURT: District Court, Brisbane DELIVERED ON: 15 September 2011 DELIVERED AT: Brisbane HEARING DATE: 15 September 2011 JUDGE: McGill DCJ ORDER: Order the defendant pay the plaintiff’s costs of the application and action to be assessed; declaration as to equitable charge; adjourn proceedings for enforcement of the charge, all in terms of the draft. CATCHWORDS: COSTS – Indemnity Costs – contract between parties providing obligation to pay all legal costs – whether costs should be ordered on the indemnity basis Gomba Holdings (UK) Ltd v Minories Finance Ltd [1993] Ch 171 at 194 – cited. Platinum United II Pty Ltd & Anor v Secured Mortgage Management Limited [2011] QCA 229 – applied. COUNSEL: M. Callanan for the plaintiff J. Gregg (solicitor) for the defendants SOLICITORS: [1] The immediate issue in this matter is whether the plaintiff is entitled under the terms of the documentation between the parties to obtain costs on the indemnity basis. -- 1 of 3 -- 2 [2] The position is that the Court has a discretion in relation to costs under the Uniform Civil Procedure Rules, and that statutory discretion is not excluded or overridden by the terms of any contract between the parties. However, where there is a relevant contract between the parties then that is a relevant factor in determining how the statutory discretion should be exercised, and a Court will usually exercise the discretion to give effect to a contractual provision which plainly and unambiguously provides for costs other than on the standard basis, which replaced under the UCPR the tradition party-and-party basis. [3] That proposition was laid down recently by the Court of Appeal in Platinum United II Pty Ltd & Anor v Secured Mortgage Management Limited [2011] QCA 229 at [6]. The decision refers to earlier decisions, including an earlier decision in England. To the authorities which are cited by the Court of Appeal one may add a reference to Gomba Holdings (UK) Ltd v Minories Finance Ltd [1993] Ch 171 at 194, which seems to me to be consistent with the approach adopted by the Court of Appeal. The issue, therefore, is whether the contractual provision plainly and unambiguously provides for taxation on another basis. [4] The Court of Appeal there had two clauses which were under consideration: Clause 15.1(c) which provided that “The borrower shall indemnity and keep indemnified the lender against any loss, expense or tax which the lender may reasonably sustain, incur or be required to pay as a consequence of … the enforcement of all or any of the securities under all or any of the transaction documents;” and clause 17.4(a) which provided that “The borrower shall indemnity and upon demand reimburse the lender for all legal fees on an indemnity basis, documentary costs and out-of-pocket expenses including and without limiting the generality of the foregoing all other expenses of the lender in connection with the negotiation, preparation, execution, completion and enforcement of all transaction documents.” [5] The Court said that it was doubtful whether the former conferred an entitlement to have costs assessed on the indemnity basis in sufficiently clear terms to justify the exercise of that discretion, but “the expression „on an indemnity basis‟ in Clause 17.4(a) clearly comprehends the indemnity basis of assessment of costs provided for in UCPR r 703(1).” [6] The relevant provision in this case is that the guarantor must pay to the plaintiff all costs, charges, fees and expenses (including without limitation all stamp duty and legal fees) incurred by the plaintiff in connection with any entry into this guarantee, the exercise or attempted exercise of any power, right or remedy under this guarantee and the failure to comply with any obligations under this guarantee. [7] The essential part of that is simply a reference to “without limitation all legal fees.” That, it seems to me, more closely approximates the wording of Clause 15.1(c) rather than Clause 17.4.(a) considered by the Court of Appeal in the Platinum United case, and on that basis in my view the clause in this case does not plainly and unambiguously provide for taxation on a basis other than the standard basis for assessment. [8] In those circumstances, it seems to me, that adopting the approach of the Court of Appeal, there is not a contractual entitlement to costs on the indemnity basis in this -- 2 of 3 -- 3 case and there is therefore no reason to depart from the ordinary principle that costs should be assessed on a standard basis. [9] Accordingly, I am prepared to order that the defendants pay the plaintiff‟s costs of the action, including this application, to be assessed, which carries costs on the standard basis. [10] I will make a declaration and perhaps adjourn to a date to be fixed the question of any consequential relief by way of enforcement of the equitable charge, and that will give the parties time to work things out. [11] The first order will be like Order (b)(i), except that it would be costs of and incidental to this action and of this application to be assessed. And then (ii) would be a declaration that the liability for those costs is subject to an equitable charge on the second defendant‟s interest in the estate in fee simple, et cetera, of the land. And then adjourn the application for consequential relief by way of enforcement of the equitable charge to a date to be fixed. [12] Well, I suppose you could say subject to an equitable charge under a written guarantee dated 14 March 2006. Yes, put that in. I will make an order in terms of the draft which you will submit to reflect that in due course. -- 3 of 3 --