Febray Pty Ltd v Equititour Pty Ltd & others; Hutchinson v Equititour Pty Ltd & Ors [2009] QDC 329

DISTRICT COURT OF QUEENSLAND CITATION: Febray Pty Ltd v Equititour Pty Ltd & others; Hutchinson v Equititour Pty Ltd & others [2009] QDC 329 PARTIES: D2123 of 2006 FEBRAY PTY LTD (AS TRUSTEE FOR THE TAYLOR FAMILY TRUST) (Plaintiff) AND EQUITITOUR (First defendant) AND PHILIP KEITH SULLIVAN (Second defendant) AND CARLSON HOTELS ASIA PACIFIC PTY LTD (Third defendant) AND JAMES DODD (Fourth defendant) D2124 of 2006 ANTHONY BRUCE HUTCHINSON AND ALISON PATRICIA HUTCHINSON (Plaintiff) AND EQUITITOUR PTY LTD (First Defendant) AND PHILIP KEITH SULLIVAN (Second Defendant) AND CARLSON HOTELS ASIA PACIFIC PTY LIMITED (Third Defendant) AND JAMES DODD (Fourth defendant) FILE NO/S: D2123 of 2006 and D2124 of 2006 -- 1 of 6 -- 2 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: District Court, Brisbane DELIVERED ON: 30 October 2009 DELIVERED AT: Brisbane HEARING DATE: 15 September 2009 JUDGE: Rackemann DCJ ORDER: The plaintiffs pay the defendants’ costs of and incidental to the proceedings to be assessed on a standard basis. The defendants’ costs thrown away by the adjournment on 7 March 2008 be assessed on a standard basis. CATCHWORDS: PROCEDURE – COSTS – where application for costs in respect to summary judgment – whether costs should be granted on a standard or indemnity basis – where plaintiffs did not unreasonably and irresponsibly in maintaining their actions Uniform Civil Procedure Rules 1999 (Qld) Cases considered: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Huntsman Chemical Co Australia Limited v International Pools Australia Pty Ltd (1995) 36 NSWLR 242 J-Corp Pty Ltd v Australian Builders Labourers’ Federation Union Workers (No.2) unreported Federal Court 9 February 1993 BC 9304556 The Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Todrell Pty Ltd v Finch (No. 2) [2008] 2 Qd R 95 COUNSEL: Mr S Carius for the plaintiffs Mr T J Bradley for the first, second and fourth defendants Mr D S Piggott for the third defendant SOLICITORS: Slater & Gordon Lawyers for the plaintiffs Minter Ellison-Gold Coast for the first, second and fourth defendants Mallesons Stephen Jaques for the third defendant -- 2 of 6 -- 3 [1] On 28 August 2009, summary judgment was given for the defendants against the plaintiffs, on the basis that the plaintiffs had no real prospects of success and there was no need for a trial. That was so because the proceedings were brought outside the relevant limitation period, and the defendants had taken that point. The defendants now seek an order for costs of the proceedings, including certain costs to be assessed on an indemnity basis. The plaintiffs concede that there should be an order for costs, but contend that those costs should be assessed on the standard basis. [2] The expiration of a limitation period does not bar the commencement of proceedings. It becomes relevant once it is raised as a defence. Accordingly, the defendants do not seek indemnity costs for any period prior to the limitation point having been taken. Rather, they seek indemnity costs on the basis that the plaintiffs acted unreasonably in maintaining their actions and defending the summary judgment applications once the point had been taken and the plaintiffs had been given an opportunity to otherwise bring the proceedings to an end. [3] Each of the actions was commenced on 21 July 2006 and was accompanied by statements of claim pleaded in similar terms. On the same day proceedings were commenced by others against the same defendants, with the claims pleaded in materially similar terms. In October 2007, Martin J granted summary judgment for the defendants in proceedings brought by Dustar Pty Ltd1. I note that costs were awarded on the standard basis in that case. [4] On 7 December 2007, the solicitors for the third defendant wrote to the solicitors for the plaintiffs asserting that the limitation issue had been judicially determined in the Dustar proceedings on materially identical pleadings and giving notice of an intended application. On 21 December 2007 the solicitor for the plaintiffs responded stating that “the point you make may be correct” for the Febray proceedings, but asserting that the Hutchinsons were in a different position, by reason of having had a five year rental guarantee. The third defendant then filed an application for summary judgment in the Hutchinsons’ proceeding on 31 January 2008, but delayed in filing a similar application in Febray. [5] On 1 February 2008, the solicitors for the third defendant again wrote to the solicitors for Febray inviting their client to consent to judgment and costs on the standard basis and foreshadowing an application for summary judgment and indemnity costs. The solicitor for the plaintiffs responded on 18 February, maintaining that it was Radison’s decision not to take a new lease which founded the cause of action. Accordingly, the third defendants filed an application for summary judgment in the Febray proceedings on 28 February 2009. [6] The third defendant seeks indemnity costs of and incidental to the applications filed on 31 January 2008 and 28 February 2008, including the costs thrown way by reason of the adjournment of 7 March 2008 (discussed later). They seek costs otherwise on a standard basis. [7] The solicitors for the first, second, and fourth defendants also corresponded with the solicitors for the plaintiffs following the decision in Dustar. On 5 December 2007 they sent a letter, in relation to Febray, which referred to the decision in Dustar, and 1 Dustar P/L v Equititour P/L [2007] QSC 300. -- 3 of 6 -- 4 give notice of an intention to apply for summary judgment, together with indemnity costs and putting a proposal to resolve the matter instead. It referred to a letter of 12 December 2006 sent in relation to each of the proceedings, in which the plaintiffs had been invited to discontinue their claims, on the basis that the first, second and fourth defendants would consent to that discontinuance. On 21 December 2007 a letter was received from the plaintiffs’ solicitors which was in similar terms to that sent to the solicitors for the third defendant on the same day. On 11 February 2008 the solicitors for the first, second, and fourth defendants sent a letter inviting the plaintiffs to consent to judgment in the Febray matter. That was responded to, on 18 February 2008 in similar terms to the letter sent on the same day to the solicitors for the third defendant. The first, second, and fourth defendants seek indemnity costs from the date of their offer 12 December, or, alternatively, from the filing of the applications for summary judgment. [8] The court has express power to order costs to be assessed on an indemnity basis2. That is not, however, the usual order. A mere lack of success on the part of the plaintiffs is not sufficient to justify an order for costs on an indemnity basis. That is so even if summary judgment has been given. The court must be persuaded to depart from the usual order that costs be assessed on a standard basis. The irresponsible pursuit of proceedings which cannot succeed because of a known legal impediment or which are otherwise hopeless may warrant an order for costs on an indemnity basis3. It was submitted that, properly advised, the plaintiffs ought not to have persisted once the limitation point was taken and they were given an opportunity, after the decision in Dustar, to bring the proceedings to an end. [9] In contending that it was reasonable for the plaintiffs to have resisted the applications in the face of the decision in Dustar, it was pointed out, on behalf of the plaintiffs, that Dustar was persuasive rather than binding authority. The submissions advanced on their behalf in seeking to resist summary judgment however, did not depend upon Dustar being wrongly decided. [10] While the pleadings in each of the actions (including Dustar) followed a certain “template”, there were differences between the case presented to Martin J and that presented in these matters. Those differences include as to the evidence and submissions relied upon. Paragraph 26 of my earlier reasons4 records that the submissions on behalf of the plaintiffs asserted that a different conclusion should be reached than in Dustar because: (a) there was now valuation evidence, from Mr Hamilton, not put before Martin J in Dustar, that there was no difference between the purchase price and the actual market value of the units at the date of the purchase; 2 Rule 703(1) of the Uniform Civil Procedure Rules 1999 (Qld). 3 The Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Todrell Pty Ltd v Finch (No. 2) [2008] 2 Qd R 95 at 96; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; Huntsman Chemical Co Australia Limited v International Pools Australia Pty Ltd (1995) 36 NSWLR 242 at 273; and J-Corp Pty Ltd v Australian Builders Labourers’ Federation Union Workers (No.2) unreported Federal Court 9 February 1993 BC 9304556. 4 Febray v Equititour; Hutchinson v Equititour [2009] QDC 281. -- 4 of 6 -- 5 (b) the claim was to be understood as relating to the difference between the purchase price and the true value; (c) that difference first became ascertainable in 2002 when the lessee declined to renew its lease, and (d) the plaintiffs’ right to claim for loss otherwise was conditional upon demonstration that the actual value of the units was less than the purchase price. [11] During the initial hearing of the application, the plaintiffs were granted an adjournment as a result of which they: • formulated proposed amendments to their pleadings; • obtained further evidence from Mr Hamilton, directed at the issue of true value, and • filed other affidavit material. [12] As the solicitors for the plaintiffs had pointed out, and my earlier reasons acknowledge, the position of the Hutchinsons was somewhat different, at a factual level, to that of Febray and Dustar, in that they had the benefit of a five year (rather than a 1 year) fixed rental agreement. [13] Whether those differences ought to have led to a different conclusion than that reached by Martin J in Dustar was the subject of extensive and competent argument by able Counsel, including Senior Counsel. While I ultimately came to the conclusion that judgment ought be given, as it had in Dustar, I do not consider that the plaintiffs acted irresponsibly by seeking to resist that conclusion and I am unpersuaded to exercise my discretion to award costs on other than the standard basis. [14] It was submitted, that the costs thrown away by reason of the adjournment on 7 March 2008 ought to be assessed on an indemnity basis in any event. I have already made an order that the plaintiffs pay the defendants’ costs thrown away, but I have yet to decide the basis upon which those costs are to be assessed. It was submitted that the plaintiffs had acted irresponsibly in that, by seeking the adjournment of 7 March 2008, and then failing to adduce evidence to support their application for leave to amend, they unduly prolonged the proceedings by groundless contentions. [15] Paragraph 27 of my earlier reasons records that upon the initial hearing of the applications, it was pointed out, on behalf of the defendants, that: (a) the propositions advanced to distinguish the reasoning in Dustar, did not appear to correspond with the pleaded case; (b) the valuation by Mr Hamilton dealt with market value, not true value; (c) the valuation did not establish that, at no time prior to July 2000, it could have been ascertained that the true value of -- 5 of 6 -- 6 the units, as at the date of purchase, had been less than the purchase price; (d) there was no suggestion that the units were ever worth (or could ever have been sold for) the purchase price plus the acquisition costs which had been incurred. [16] The plaintiffs were granted an adjournment in order to formulate proposed amendments to their pleadings and to obtain further evidence, on the condition that they also file and serve affidavit material evidencing the basis for the allegations contained in the further amendments. Amendments were subsequently formulated and further affidavit material was filed, however, while the further evidence from Mr Hamilton addressed the issue of true value, it did not establish an evidential basis for confronting points (c) and (d) above. Further, Mr Hamilton’s material did not address specific relevant matters which the solicitors for the third defendants had specifically highlighted. That that was unsatisfactory in the circumstances. [17] The costs thrown away were incurred by reason of the adjournment. That adjournment was granted because there was an inconsistency between the plaintiffs’ stated and pleaded cases and because deficiencies had been identified in the affidavit material. Those deficiencies ought to have been identified by the plaintiffs in advance of the initial hearing. That their failure to have done so led to an adjournment justifies an order for costs. That circumstance, however, does not, of itself, persuade me that those costs ought to be assessed on an indemnity basis. The plaintiffs did use the adjournment for its intended purpose, that is, to formulate proposed amendments to its pleading and to file further affidavit material. That material was also ultimately found to be deficient and, in one respect, unsatisfactory. However, that does not lead me to the conclusion that the plaintiffs’ acted irresponsibly in seeking the adjournment from which the costs flowed. I will direct that those costs also be assessed on the standard basis. -- 6 of 6 --