Dunworth v Mirvac Qld P/L (No 2) [2010] QSC 476

SUPREME COURT OF QUEENSLAND CITATION: Dunworth v Mirvac Qld P/L (No 2) [2010] QSC 476 PARTIES: MARIS ANNE DUNWORTH (plaintiff) v MIRVAC QUEENSLAND PTY LIMITED ACN 060 411 207 (defendant) FILE NO: BS4514/09 PARTIES: MARIS ANNE DUNWORTH (plaintiff) v MIRVAC QUEENSLAND PTY LIMITED (ACN 060 411 207) (defendant) FILE NO: BS4712/09 DIVISION: Trial PROCEEDING: Trial ORIGINATING COURT: Supreme Court, Brisbane DELIVERED ON: 17 December 2010 DELIVERED AT: Brisbane HEARING DATES: Submissions on costs 10 December 2010; written submissions 15, 16 December 2010 JUDGE: Margaret Wilson J ORDER: In proceeding 4514 of 2009: It is ordered that the plaintiff pay the defendant’s costs of and incidental to the claim and counterclaim, including reserved costs if any, on the indemnity basis. In proceeding 4712 of 2009: It is ordered that the plaintiff pay the defendant’s costs of and incidental to the proceeding, including reserved costs if any, on the standard basis. CATCHWORDS: PROCEDURE – COSTS – DEPARTING FROM THE GENERAL RULE – ORDER FOR COSTS ON INDEMNITY BASIS – where defendant made offer to settle – where defendant changed pleading ten days before trial – where plaintiff concedes costs should be awarded against her -- 1 of 5 -- 2 – whether changes to defendant’s pleading had material effect on offer to settle – whether defendant should recover costs on indemnity basis Uniform Civil Procedure Rules 1999 (Qld), Chapter 9, Part 5, rr 360, 361 Castro v Hillery [2003] 1 Qd R 651 at 663-665, cited COUNSEL: CJ Murdoch for the plaintiff MD Martin for the defendant SOLICITORS: Hyland Lawyers for the plaintiff ClarkeKann for the defendant [1] MARGARET WILSON J: On 10 December 2010 in proceeding 4514/09 I ordered that the claim be dismissed and made an order for specific performance on the counterclaim. In proceeding 4712/09 I ordered that the claim be dismissed. [2] Counsel for the defendant made oral submissions on costs. Since then counsel for the plaintiff has made written submissions on costs, and counsel for the defendant has made written submissions in reply. [3] The defendant seeks costs of both proceedings on the indemnity basis. Counsel for the plaintiff concedes that his client should be ordered to pay the defendant’s costs of and incidental to both proceedings, including reserved costs, but submits that those costs should be on the standard basis. [4] In support of his argument for indemnity costs, counsel for the defendant relied on clause 13.6 of the contract and on an offer to settle made by his client on 19 October 2009, which was expressed to be pursuant to Chapter 9 Part 5 of the Uniform Civil Procedure Rules 1999 (Qld) ("UCPR"). [5] Clause 13.6 is in these terms – "13.6 The Seller may claim damages for any loss it suffers as a result of the Buyer’s default, including its legal costs on a solicitor and own client basis." Clearly the reference to "solicitor and own client basis" should be construed as a reference to costs on the indemnity basis. [6] The defendant was the Seller. Its counterclaim was for specific performance and damages in addition to or in lieu of specific performance. Contrary to the requirements of UCPR rr 150(1)(b) and 155, it did not particularise its claim for damages. It sought costs in its prayer for relief, but not expressly on the indemnity basis. In these circumstances I am inclined to think that its claim for damages did not invoke clause 13.6, and that there should not be an order for indemnity costs pursuant to that clause. -- 2 of 5 -- 3 [7] On 19 October 2009 the defendant made an offer to settle in the following terms – "Our client instructs us to make a formal offer pursuant to Chapter 9, Part 5 of the Uniform Civil Procedure Rules. Our client offers to settle the proceedings on the basis that: 1. your client completes the Contract of Sale the subject of these proceedings by no later than 27 November 2009; 2. settlement figures to remain calculated at the original Settlement Date of 12 May 2009; 3. our client from 19 October 2009 until 27 November 2009 waives the requirement for your client to pay default interest in accordance with clause 5 of the Contract; 4. within 7 days of settlement of the Contract, your client discontinues its claim in proceeding numbers 4514 of 2009 and 4712 of 2009 as against our client; 5. upon receiving your client's Notices of Discontinuance of proceedings as against our client, our client will discontinue its counterclaim in proceeding number 4514 of 2009 against your client within 7 days; 6. the parties bear their own costs of and incidental to proceedings 4514 of 2009 and 4712 of 2009. This offer is open for acceptance by your client for a period of 14 days." [8] Thus the offer was to settle both proceedings. The plaintiff did not accept the offer. The order for specific performance made after the trial is more favourable to the defendant than that proposed in the offer, and the plaintiff concedes that there should be an order for costs against her in both proceedings. [9] As counsel for the plaintiff has submitted, an offer to settle must be evaluated in the light of circumstances prevailing when the offer is made1. [10] Ten days before the trial began, the defendant notified the plaintiff of changes it wished to make to its defence and counterclaim. The plaintiff’s case depended on proof of certain representations allegedly made by Ms Patch and Mr Knight. At the time the offer was served, the defendant defended the claim on the basis that neither Ms Patch nor Mr Knight had spoken to the plaintiff. The defendant’s ultimate position was that it admitted that Ms Patch and Ms Knight had spoken with the plaintiff and her husband. It conducted the trial on the basis that neither of them had any specific recollection of speaking with the plaintiff and her husband, and on the basis of Mr Knight’s usual practice when he drove prospective purchasers to the trestle tower unaccompanied by a sales consultant. [11] The defendant did not raise a new issue on which it ultimately succeeded. It remained incumbent on the plaintiff to prove the representations on which she relied. The representations were alleged to have been made orally, and so the 1 See Castro v Hillery [2003] 1 Qd R 651 at 663-665 per Williams JA and Wilson J. -- 3 of 5 -- 4 credibility of the plaintiff and her husband was in issue. That was always so. Counsel for the plaintiff seems to be suggesting that there would have been a better chance of their evidence being accepted if the defendant had maintained its denials of the conversations. I assessed credibility in light of all the evidence presented at the trial, and I do not intend to express any opinion on whether I might have done so differently had the evidence been different. [12] In my view the change to the defendant’s pleading did not have a material effect on the offer to settle. [13] Rules 360 and 361 of the UCPR provide – "360 Costs if offer to settle by plaintiff (1) If – (a) the plaintiff makes an offer to settle that is not accepted by the defendant and the plaintiff obtains a judgment no less favourable than the offer to settle; and (b) the court is satisfied that the plaintiff was at all material times willing and able to carry out what was proposed in the offer; the court must order the defendant to pay the plaintiff’s costs calculated on the indemnity basis unless the defendant shows another order for costs is appropriate in the circumstances. (2) If the plaintiff makes more than 1 offer satisfying subrule (1), the first of those offers is taken to be the only offer for this rule. 361 Costs if offer to settle by defendant (1) This rule applies if – (a) the defendant makes an offer to settle that is not accepted by the plaintiff and the plaintiff obtains a judgment that is not more favourable to the plaintiff than the offer to settle; and (b) the court is satisfied that the defendant was at all material times willing and able to carry out what was proposed in the offer. (2) Unless a party shows another order for costs is appropriate in the circumstances, the court must – (a) order the defendant to pay the plaintiff’s costs, calculated on the standard basis, up to and including the day of service of the offer to settle; and (b) order the plaintiff to pay the defendant’s costs, calculated on the standard basis, after the day of service of the offer to settle. (3) However, if the defendant’s offer to settle is served on the first day or a later day of the trial or hearing of the proceeding then, unless the court otherwise orders – (a) the plaintiff is entitled to costs on the standard basis to the opening of the court on the next day of the trial; and -- 4 of 5 -- 5 (b) the defendant is entitled to the defendant’s costs incurred after the opening of the court on that day on the indemnity basis. (4) If the defendant makes more than 1 offer satisfying subrule (1), the first of those offers is taken to be the only offer for this rule." [14] Rule 361 has no application in either proceeding because the plaintiff did not obtain any judgment in her favour. [15] Rule 360 applies mutatis mutandis to a counterclaim made by a defendant against a plaintiff. The defendant should recover its costs of the counterclaim in the first proceeding on the indemnity basis. [16] The issues in the claim and the counterclaim in proceeding 4514/09 were the same. Accordingly, the defendant should recover its costs of the whole proceeding on the indemnity basis. [17] In proceeding 4712/09, the defendant should recover its costs on the standard basis. [18] There will be items such as counsel’s fees to be apportioned between the two proceedings. That is a matter to be determined in the costs assessment. Orders In proceeding 4514/09, it is ordered that the plaintiff pay the defendant’s costs of and incidental to the claim and counterclaim, including reserved costs if any, on the indemnity basis. In proceeding 4712/09, it is ordered that the plaintiff pay the defendant’s costs of and incidental to the proceeding, including reserved costs if any, on the standard basis. -- 5 of 5 --