Mr Green Pty Ltd v Broadbeach Bowls and Community Club Inc. (No 2)

DISTRICT COURT OF QUEENSLAND

CITATION:	Mr Green Pty Ltd v Broadbeach Bowls & Community Club Inc. (No 2) [2018] QDC 65
PARTIES:	MR GREEN PTY LTD (plaintiff) v BROADBEACH BOWLS & COMMUNITY CLUB INC (defendant)
FILE NO/S:	D4166/2016; S2791/2010.
DIVISION:
PROCEEDING:	Civil Trial – interest and costs
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	12 April 2018
DELIVERED AT:	Brisbane
HEARING DATE:	(submissions in writing)
JUDGE:	McGill SC DCJ
ORDER:	Order the defendant pay the plaintiff’s costs of the proceeding, to be assessed as if the proceeding had been started in the District Court, on the standard basis up to 7 August 2017, and from 8 August 2017 on the indemnity basis.  Order for interest not varied.
CATCHWORDS:	INTEREST – Recoverability under statute – period for which interest payable – significance of delay by plaintiff – test for reducing period of interest – whether unreasonable delay.  COSTS – Offer to settle – offer under rules – whether other order appropriate – whether failure to accept offer unreasonable.  Civil Proceedings Act 2011 s 58. UCPR rr 360, 692(2). Alborn & Ors v Stephens [2010] QCA 58 – applied. Batchelor v Burke (1981) 148 CLR 448 – cited. Bennett v Jones [1977] 2 NSWLR 355 – applied. BHP Coal Pty Ltd v O & K Orenstein & Koppel AG (No 2) [2009] QSC 64 – followed. BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (No 4) (2009) 263 ALR 63 – cited. BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 – considered. Bulsey v State of Queensland [2016] QCA 158 – cited. Callinan v Borovina [1977] Qd R 366 – cited. Camm v Salter [1992] 2 Qd R 342 – considered. Cerutti v Crestside Pty Ltd [2016] 1 Qd R 89 – cited. Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382 – considered. Cox Constructions Pty Ltd v Dawes (1999) 73 SASR 557 – cited. Cullen v Trappell (1980) 146 CLR 1 – cited. Fire & All Risks Insurance Co Ltd v Callinan (1978) 140 CLR 427 – considered. Hadgelias Holdings Pty Ltd v Seirlis [2014] QCA 325 – cited. ICT Pty Ltd v Sea Containers Ltd [2006] NSWSC 1280 – considered. Interchase Corporation Ltd v Grosvenor Hill (Qld) Pty Ltd (No 3) [2003] 1 Qd R 26 – applied. J & D Rigging Pty Ltd v Agripower Australia Ltd [2014] QCA 23 – cited. Kalls Enterprises Pty Ltd v Baloglow (No 3) [2007] NSWCA 298 – applied. Keeley v Horton [2016] QCA 253 – considered. Kitchen v Vision Eye Institute Ltd [2017] QCA 32 – cited. Lovick & Son Developments Pty Ltd v Doppstadt Australia Pty Ltd (No 3) [2013] NSWSC 135 – considered. Mather v Smith (No 2) [2014] QCA 66 – cited. MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 – cited. Metro Meat Ltd v Werlick (1993) Aust Torts Reps 81–242 – considered. Michael Vincent Baker Superannuation Fund Pty Ltd v Aurizon Operations Ltd [2017] 2 Qd R 761 – followed. Mineralogy Pty Ltd v BGP Geo Explorer Pty Ltd [2017] QSC 219 - cited. Murdoch v Lake [2014] QCA 269 – applied. Osborne v Kelly (1993) 61 SASR 308 – considered. Parker v Guardian Fire Sprinkler Co (Qld) Pty Ltd [1982] Qd R 709 – cited. Ruby v Marsh (1975) 132 CLR 642 – cited. Serisier Investments Pty Ltd v English [1989] 1 Qd R 678 – cited. Stewart v Atco Controls Pty Ltd (No 2) (2014) 252 CLR 331 – applied. Thompson v Faraonio (1979) 54 ALJR 231 – cited.
COUNSEL:	P L Somers for the plaintiff M Steele for the defendant
SOLICITORS:	Cronin Litigation Lawyers for the plaintiff Gilberts Legal for the defendant

1. In this matter I gave judgment on 9 March 2018 for the plaintiff for an amount of $65,938.00, together with $45,336.60 by way of interest under the Civil Proceedings Act 2011 s 58. When the reasons were delivered I invited submissions as to costs, which have now been received. The solicitor for the defendant has also made submissions in relation to the interest payable, essentially submitting that interest should not be allowed for the full period since the cause of action accrued, but only for the period from 1 June 2009 to 18 September 2012, because of the plaintiff’s delay in pursuing its claim. Since this was not a matter addressed during submissions at the end of the trial, I have considered these submissions on their merits.

Interest by statute

2. The Civil Proceedings Act 2011 provides in s 58 for interest to be included in the amount of a judgment for the payment of money, other than where interest is payable as of right, “at the rate the court considers appropriate for all or part of the amount and for all or part of the period between the date when the cause of action arose and the date of judgment.” The section reproduces, in more modern drafting style, what was previously in the Supreme Court Act 1995 s 47, which in turn came from the Common Law Practice Act 1867 s 72.  Despite the antiquity of that Act, the section was inserted by the Common Law Practice Act Amendment Act 1972 s 4, replacing a provision[1] which gave a much more limited power to award interest at a rate fixed by the Act, “from the time when such debt or sum was payable… .” 

   [1]Based on the English Act 3 and 4 Wm 4 C 42, s 28.

3. It is well established that under these provisions statutory interest is the “price” to be paid by a defendant for keeping a plaintiff out of money to which the plaintiff is entitled, so as to provide compensation to the plaintiff for the loss of use of the judgment money.[2]  Hence if the plaintiff was not in fact out of pocket in respect of the amount recovered, in whole or in part, interest is not ordinarily awarded.[3]  In Thompson v Faraonio (1979) 54 ALJR 231 Lord Fraser delivering the opinion of the Privy Council said at p 233:

“The reason for awarding interest is to compensate the plaintiff for having been kept out of money which theoretically was due to him at the date of his accident.”

4. Applied literally, this would justify an order for interest on the full amount of the damages assessed from the date the cause of action arose, but despite the endorsement of this proposition by the majority of the High Court in Cullen v Trappell (1980) 146 CLR 1 at 18, in practice interest has been awarded on so much of the damages as represents loss which has already been suffered by the plaintiff as at the date of judgment. That was established by the decision of the Full Court in Callinan v Borovina [1977] Qd R 366, confirmed on appeal in Fire & All Risks Insurance Co Ltd v Callinan (1978) 140 CLR 427, where it was held that it was wrong to allow interest on an award of general damages without regard to the fact that it contained elements of loss of earning capacity, pain and suffering and loss of amenities each of which represented detrimental consequences only some of which had already been borne by the plaintiff before trial: p 432.

5. The High Court said at p 433 that “a proper exercise of discretion must necessarily involve the paying of due regard to the time of manifestation and to the duration of the various detriments in question.”  Hence the principle was established that interest should be allowed by reference to the time of manifestation of the various relevant detriments which the plaintiff had already incurred.[4] 

   [4]Hence the approach I adopted in my earlier reasons at [140].

Early decisions on delay

6. It was at first the practice for interest to be allowed only from the date when the proceeding was commenced.  In Parker v Guardian Fire Sprinkler Co (Qld) Pty Ltd [1982] Qd R 709 McPherson J pointed out that the proper date from which to calculate interest on pre-trial loss is the date when the injury was sustained, and not the date of issue of the writ: p 710. This then became the usual practice in Queensland, subject to the application of the Callinan principle.[5] Nevertheless, there are cases where the court has allowed less than the ordinary period, for various reasons including delay.  In Camm v Salter [1992] 2 Qd R 342 Thomas J said at p 344:

“When a very substantial period has elapsed between accident and trial it is not uncommon for the trial Judge to limit the assessment of interest to a period such as five years.  Of course the circumstances are infinitely various and the trial Judge’s discretion in this respect is unfettered.”

7. Various explanations have been offered for this approach.  In Osborne v Kelly (1993) 61 SASR 308, Mohr J, with whom the other members of the Full Court agreed, endorsed a comment by the Chief Justice in an earlier unreported decision that if the plaintiff is kept out of the money due to his own default he should not be allowed interest during that period. In Osborn the plaintiff suffered injury in an accident in July 1978 and the proceedings were commenced in September 1980.  The plaintiff was not in a positon to give proper instructions, and in May 1984 the Public Trustee was appointed to manage his estate.  Thereafter the Public Trustee prosecuted the proceedings until the trial in July 1992. 

8. The trial Judge was critical of the slow progress of the action, and noted that on two occasions the plaintiff had failed to comply with court orders, and that two applications to dismiss the claim, one for want of prosecution and one for failing to comply with an order, were unsuccessful but failed to inspire the plaintiff’s solicitors to further efforts.  He limited interest to a period of five years, but on appeal it was held that there was no personal default by the plaintiff, and in those circumstances it was an error to deprive the plaintiff of the benefit of interest for the whole period of twelve years: p 311.  That it is necessary to focus on delay which is the responsibility of the plaintiff personally rather than solicitors or others also appears to have been endorsed in Serisier Investments Pty Ltd v English [1989] 1 Qd R 678 at 680.

9. That it was relevant that a plaintiff was kept out of the money by his own delay was endorsed by Olsson J in Metro Meat Ltd v Werlick (1993) Aust Torts Reps 81–242 at 62,501. The other members of the Full Court agreed, although King CJ added the proposition that, although delay was a factor to be considered:

“It should not be given undue importance for two reasons.  The first is that a defendant has remedies at his disposal for unwarranted delay on the part of a plaintiff.  If he neglects to pursue his remedies, the plaintiff’s delay becomes a less important consideration.  That does not apply in the present case because the delay occurred in serving the proceedings and the defendant had no remedy for that.  The second reason is purely practical.  From the time of the introduction of the statutory interest provisions, the courts have inclined strongly against allowing interest to become a new issue in litigation and a source of costly disputations.  The statute gives to the judges a broad discretion to be exercised on common sense lines.  It would be totally contrary to the spirit of the legislation to allow the justification for delay to become an issue in the proceedings.  I consider the delay should therefore be used as a discretionary basis for reducing the interest otherwise allowable only where the delay is considerable and plainly unjustifiable.”

10. The third member of the court, Mullighan J said at p 62,503:

“I do not subscribe to the view that delay, even unjustified delay, should be the dominant factor in the exercise of discretion with respect to an award of interest.  It is but one matter to be brought to account along with all other matters which bear upon how that discretion is to be exercised.  In many cases unjustified delay may be a matter of considerable importance.  In others, it may be of less significance.  … How the discretion is to be exercised in each case depends upon all of the relevant circumstances.”

11. In BP Exploration Co (Libya) Ltd v Hunt(No 2) [1979] 1 WLR 783, Goff J as he then was identified at p 845 the fundamental principle that interest is awarded because the plaintiff has been deprived of the use of the money which was due to him. At p 846 he noted that “interest will generally run from the date of accrual of the cause of action in respect of money then due or loss which then accrues; and in respect of loss which accrues at a date between accrual of the cause of action and judgment, from such date. For convenience, I shall refer to these dates compendiously as the ‘date of loss’… .”

12. His Lordship went on to identify three main groups of cases where a court may depart from that fundamental principle.  The first was where in all the circumstances the defendant ought reasonably to have been allowed some proper period of time to assess the plaintiff’s claim before the defendant could either tender payment or make provision if money was found to be due, although the mere fact that it was impossible for the defendant to quantify the sum due until judgment has been given would not generally preclude an award of interest from the date of loss: p 847.[6] 

    [6]His Lordship referred to authorities in the Admiralty jurisdiction in support of this approach.

13. The second group of cases were those where “the plaintiff has been guilty of unreasonable delay in prosecuting his claim [where] the court may decline to award interest for the full period from the date of loss.  This may be to encourage plaintiffs to prosecute their claims with diligence, and also because such conduct may lull a defendant into a false sense of security, leaving him to think that the claim will not be pursued against him.”  The third group were cases where, because of particular circumstances, such as the basis upon which damages were assessed, it would be unjust to award interest from the date of loss. 

14. That approach to delay was cited with apparent approval by Thomas J, with whom the other members of the Full Court agreed, in Serisier Investments Pty Ltd v English (supra) at 679, although the notion that limiting interest in this way was to encourage plaintiffs to prosecute their claims with diligence was specifically rejected by Olsson J in Werlick (supra) at p 62,501: “The rationale for such an approach lies not in any penal sanction against a failure to prosecute per se… .”

15. One of the justifications given for awarding interest is that it compensates a plaintiff for the effects of inflation during the period between when the loss was suffered and when judgment is given.  This was the basis for the reasoning adopted in the High Court when it drew a distinction between interest in respect of past pecuniary loss and interest in respect of past non-pecuniary loss.[7]  The former was assessed by reference to the actual amounts of money involved at the various times in the past, whereas the latter was assessed by reference to the current rates for such awards, so that there was no need in the latter case to provide compensation for any inflation during the delay.  It follows that depriving the plaintiff of part of the interest between the time when the loss was suffered and the date of judgment has the effect that the defendant has the benefit of the use of the money during that period, and also has the benefit, in a case such as the present, of the effect of inflation eroding the burden on the defendant, and the value to the plaintiff, of the damages ultimately received.

    [7]MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657 at 663-4.

The later authorities

16. The notion that a plaintiff is to be penalised for delay or failure to observe court procedures in the exercise of the discretion to award interest was rejected by Moffitt P in Bennett v Jones [1977] 2 NSWLR 355 at 367. At p 369 he added: “The lapse of time caused between accrual of the cause of action and payment or verdict has the consequence that the defendant has not had to pay moneys and the plaintiff has not received moneys in that period.” At p 370 however he did note that cases could exist “where delay of one party causes or may cause detriment to the other party in relation to interest, and in consequence an adverse order is made… .”

17. At p 371, in a passage too long to quote, his Honour said that the period for which interest is ordered should be adjusted only in those cases where the deliberate delaying tactics of a plaintiff or a defendant are likely to cause financial detriment to the other party.  He also noted that this is more likely to occur before the proceedings are commenced, because thereafter the defendant has some opportunity to prevent delay.  Hutley JA generally agreed, adding at p 375 that he was “by no means convinced that the conduct of the parties should ordinarily affect the award of interest.”  Samuel JA also agreed, but added some remarks directed to how interest was to be awarded in personal injury cases.  Ultimately this became quite a complicated area, which is now in Queensland largely regulated by statute.

18. In Interchase Corporation Ltd v Grosvenor Hill(Qld) Pty Ltd (No 3) [2003] 1 Qd R 26, McPherson JA, with whom in this respect it appears the other members of the Court of Appeal agreed, said at [59]: “The purpose or function of an award of interest under the section is restitutionary… to compensate the plaintiff for being kept out of the money represented by the judgment sum… . In a perfect world, a defendant who injured a plaintiff would immediately recognise the wrong done and pay the amount of compensation required to make good the loss. For reasons that are self-evident, that never happens in practice … .” In that case the cause of action arose in July 1988 but no writ was issued until April 1994, and it was argued that interest should be limited because of delay in instituting and prosecuting the proceeding. McPherson JA said at [61]:

“It is, to my mind, not immediately apparent why, as a matter of justice, that delay should operate to defeat or reduce a plaintiff’s right to receive interest as compensation or damages for the whole of the period during which the amount was not paid.  Quite apart from the loss to the plaintiff, the defendant has had the benefit of the money, and may be assumed to have put it to good use.”[8]

19. Reference was made to Serisier Investments (supra) and it was noted that the Judge at first instance had referred to Bennett v Jones (supra) and had awarded interest for the full period, not being persuaded that there was any unreasonable delay or that there was any particular detriment to the defendant calling for compensation that was less than full: [62]. On appeal it was held that there was no error in this decision which justified the intervention of the Court of Appeal.

Defendant’s authorities

20. The defendant relied on six cases, one of which (Osbourne v Kelly) I have already discussed.  The approach in that decision was confirmed in Cox Constructions Pty Ltd v Dawes (1999) 73 SASR 557 by Perry J delivering the judgment of the Full Court, although in that case, where ten years had elapsed between the plaintiff’s injury and the trial, interest was not limited because the point had not been raised at the trial, or by counsel during the appeal.[9]  In Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382 the Victorian Full Court considered a section making interest payable in somewhat different terms from s 58. In that case there was a claim by a liquidator to recover, as a preference, a payment which had apparently been regular when made and which was at the time it was made secured by a debenture. There was some delay after the demand before a proceeding was commenced, and the debenture provided the defendant with a good defence until that too was set aside by the liquidator, at the time of trial. The decision at first instance limited interest to two and a half years, out of a potential period of about four and a half years.

    [9]Suggesting that in practice limiting interest because of delay was quite rare. 

21. On appeal it was held that no error had been shown in this decision, bearing in mind that the proceeding had been instituted well after the time when proceedings had been foreshadowed, which could have led the defendant to believe the liquidator was abandoning the claim, at the time the proceeding was commenced the defendant had good reason to believe it had a complete defence, and there were other factors which were properly taken into account.  The argument advanced by the appellant liquidator, that delay could not properly be taken into account as a relevant consideration in allowing interest, was rejected, essentially on the basis that it could not be shown that delay was always irrelevant: p 400.  The statutory test was whether “good cause is shown to the contrary” and the court declined to place any gloss on those words.

22. In ICT Pty Ltd v Sea Containers Ltd [2006] NSWSC 1280 Einstein J at [15] cited a passage from the judgement of Finn J in HK Frost Holdings Pty Ltd v Darvall McCutcheon [1999] FCA 795 at [11], where he noted considerable diversity in judicial opinion as the extent to which, if at all, the rate or the period selected for interest should as a matter of discretion be changed because of delay in the prosecution or defence of a claim where no resultant detriment to the other party is shown. Finn J adopted the test that the period for which interest is awarded can be properly adjusted if to allow interest for the whole period would work an injustice to the respondent in the circumstances. It is not clear however whether Einstein J adopted this test; he also referred to other decisions, and also noted that no claim had been advanced for pre-award interest until a very late stage, sometime after a final award in the relevant arbitration was given. That was a case where the interest followed an arbitrator’s award, and the arbitration had taken some ten years after service of the initial points of claim, which his Honour described as “very unusual circumstances indeed.” By contrast in the present case interest was claimed when the first version of the claim and statement of claim were filed. It is not at all clear whether his Honour was applying a test consistent with the decision in Interchase Corporation (supra), and in the circumstances the case is of very little use.

23. In Kalls Enterprises Pty Ltd v Baloglow (No 3) [2007] NSWCA 298 the New South Wales Court of Appeal, after giving judgement on appeal for the first time, received submissions in relation to interest where it was submitted that interest should be calculated at a lesser rate or for a lesser period because of the plaintiff liquidator’s delay in demanding payment, bringing the proceedings and prosecuting them, because the liquidator had failed to seek recovery from other persons, and because interest calculated in the usual way would substantially exceed that which could have been obtained by prudent investment at prevailing commercial rates of interest and so would overcompensate the plaintiff. The court in a joint judgement at [10] said:

“Delay is ordinarily not a reason for refusing or reducing the inclusion of interest.  The defendant has had the use of the money, and the plaintiff has been out of its use and should be compensated accordingly.  The purpose is to compensate the plaintiff for being kept out of its money, not to punish it for delay.  Interest should be included unless good cause be shown, in order to fulfil the purpose.”[10]

24. The court added at [11]:

“Delay can nonetheless be relevant to the exercise of the discretion.  For example, unreasonable delay and a high interest rate may mean that the defendant is unjustly left as the source of the plaintiff’s investment income.  The question is one of injustice to the defendant.  If the interest rates used by the plaintiff exceed commercial interest rates (although commercial interest rates are an imprecise criterion, see below) the plaintiff’s self-inflicted loss of use of money may be unfairly made a burden on the defendant.”

25. In that case it was held that although the passage of time before the matter was finalised was greater than desirable, it was not so great that unreasonable failure to bring and prosecute the claim in a timely manner should be inferred, and for most of the time the defendant had some opportunity to prevent delay.  The court said the failure to pursue a claim against other persons was not relevant, and after some consideration of earlier authorities dealing with commercial interest rates concluded that the usual practice, of adopting the rates applying after judgement, should not be departed from.

26. In Lovick & Son Developments Pty Ltd v Doppstadt Australia Pty Ltd (No 3) [2013] NSWSC 135, Slattery J summarised the principles at [11] as follows:

“The principles governing the effect of a plaintiff's procedural delays in litigation on the Court's exercise of its discretion to award Civil Procedure Act s 100 interest are well established. An award of interest should not be refused merely for the purpose of penalising delay: Bennett v Jones[1977] 2 NSWLR 355. The purpose of the provision is to compensate the plaintiff for being out of its money: MBP (SA) Pty Limited v Gogic[1991] HCA 3; (1991) 171 CLR 657 at 663, and Grincelis v House[2000] HCA 42; (2000) 201 CLR 321 at [16]. Mere delay in bringing or prosecuting proceedings will not usually provide a compelling basis for refusing an award of interest, because the plaintiff has still been out of the plaintiff's money; but protracted and unreasonable delay, especially where significant differences exist between Court interest rates and prevailing commercial rates of interest, may justify a discretionary reduction either in the rate of interest or in the period over which interest is awarded: Clarke v Foodland Stores Pty Ltd[1993] 2 VR 382 and ICT Pty Ltd v Sea Containers Limited[2006] NSWSC 1280 at [14] - [19]. But the question is one of injustice to the defendant. Unreasonable delay, and amounts of interest at a high rate (in excess of commercial rates) "may mean that the defendant is unjustly left as the source of the plaintiff's investment income": Kalls Enterprises Pty Limited (in liquidation) and Ors v Baloglow & Anor (No 3)[2007] NSWCA 298. Thus, in some limited circumstances an adjustment to the rate of interest or to the period over which the interest accrues is permissible.”      

27. In that matter the history was analysed in a little detail.  The relevant factors in that case included that a loss of profits claim on which the plaintiffs ultimately succeeded had only been formulated and supported very shortly before and during trial, and many other causes of action were abandoned, which was described at [19] as unsatisfactory, to an extent that costs awarded to the plaintiffs were reduced in that matter; but that was regarded as an insufficient basis on its own for the court to make adjustments to the rate or period of interest.  That case supports a very limited jurisdiction to vary the period over which interest is allowed, and does not provide any assistance to the defendant.

The current test

28. The decision in Interchase Corporation (supra) has since been frequently cited and applied by the Court of Appeal.[11]In Keeley v Horton [2016] QCA 253 Burns J with whom the other members of the court agreed cited Interchase Corporation (supra) at [7] where it was noted that it was not argued that the first appellants unreasonably delayed in the prosecution of their claim. The matter at issue was a period of 122 days when the trial was adjourned to enable the appellants to amend their statement of claim and obtain further expert evidence, and to recall witnesses. It was noted however that in the interim there was also an amendment to the defence, and that the respondent also called more evidence, and it was said that both sides took advantage of the adjournment to remodel their pleadings and gather evidence in support of their respective cases: [10]. Given that the purpose of allowing an amendment was to bring clarity to the respective pleadings, both sides benefited from the adjournment so it was not appropriate to exclude this period, and interest was allowed from when the cause of action arose to the date of judgment in the court below: [11].[12] 

    [11]See for example Cerutti v Crestside Pty Ltd [2016] 1 Qd R 89 at [90]; Mather v Smith (No 2) [2014] QCA 66 at [5]; Bulsey v State of Queensland [2016] QCA 158 at [47].

    [12]The Court of Appeal had previously varied the judgment below, but had not set it aside and itself given judgment for a particular amount: [6].

29. This decision on its own leaves unclear whether it is sufficient to show that a plaintiff unreasonably delayed in the prosecution of the claim, or whether the more restrictive approach adopted in Bennett v Jones (supra), and apparently endorsed by the Court of Appeal in Interchase Corporation (supra), is still to be applied.  Given that that passage was specifically cited by the Court however I cannot regard this as a decision which requires a departure from the approach endorsed by the Court in Interchase Corporation.  In my opinion that is the Court of Appeal decision which lays down the principle I should apply in a principled exercise of the discretion.

30. Accordingly the question is whether there has been unreasonable delay caused deliberately by the plaintiff itself which was or could have been the cause of financial detriment to the defendant. 

History of the proceeding

31. I shall summarise briefly the history of the matter.  The proceeding was commenced by the filing of a claim and statement of claim in the Supreme Court on 18 March 2010, which was at the time appropriate given that the damages claimed was $370,925.00.[13]  I do not know when it was served, but the notice of intention to defend, defence and counterclaim were filed on 2 June 2010, and a reply and answer on 23 June 2010.  An amended statement of claim was filed on 7 August 2012, involving amendments described as significant by Jones DCJ in reasons delivered 19 July 2017, which summarised them.  For my purposes, it is sufficient to say that the amendments represented attempts, including by way of a claim for rectification, to avoid the difficulty for the plaintiff in relation to the option to extend the contract identified in my earlier reasons for judgement.  It is understandable that the plaintiff’s advisors would attempt to overcome this difficulty if they could.

    [13]As of 18 March 2010 the monetary limit of the District Court jurisdiction was $250,000.00.

32. On 15 October 2012 the plaintiff filed an application which among other things sought leave to serve on the defendant a request for trial date. In support of that application an affidavit by the then solicitor for the plaintiff was filed which deposed to the fact that lists of documents had been served in August and October 2010, further disclosure had been made up until March 2012, on 13 January 2012 the defendant had formerly abandoned its counterclaim,[14] and the reply and answer and statement of claim had subsequently been amended. The need for the application arose because the plaintiff wished to rely on a report by Mr Otto, and the defendant was taking the point that it had not been provided within 90 days of the close of pleadings.

    [14]On 20 September 2016 the defendant finally filed a notice of discontinuance giving effect to this abandonment. 

33. On 30 October 2012 a deputy registrar made a consent order for certain information in a report of Mr Benjamin, the defendant’s accountant, presumably the report which became exhibit 17, to be provided by a certain date, directions for further pleadings and for further disclosure, and a provision that if the parties did not sign and file a request for trial date by 4.00 pm on 28 January 2013 either party could have the matter listed for directions. An amended statement of claim was filed on 16 November 2012, four days later than the consent order provided, although the amendments on this occasion were described by Jones DCJ as relatively unimportant: [6]. An amended defence was filed on 19 December (16 days late), and a further amended defence was filed on 11 February 2013. It appears that neither party listed the matter for directions, despite the omission to file a request for trial date by 28 January 2013.

34. On 3 April 2013 there was a notice of change of solicitors filed on behalf of the defendant (to the current solicitor for the defendant), and a further amended reply filed on 25 September 2013, responding to the amendments to the defence made in December 2012 and February 2013. There followed an application on behalf of the plaintiff to have some or all of the further amended defence struck out, and after that application was adjourned to a date to be fixed, a further further amended defence was filed on 6 May 2014. This prompted another application to strike out, which however was also adjourned by consent to a date to be fixed, and was never brought on again by the plaintiff. A third amended statement of claim was filed on 5 December 2014 which made what Jones DCJ described as a number of material amendments, including a further attempt to deal with the problem of the option to renew: [8]. No amended defence was filed in response to this pleading at that time, nor so far as appears from the file did the defendant react in any other way. In 2015 and 2016 the then solicitors for the plaintiff sought the defendant’s consent to an order transferring the matter to the District Court, and made offers to settle, but received no response from the solicitor for the defendant.[15]   

    [15]Affidavit of Joyce filed 27 March 2018 para 11. 

35. The plaintiff filed a notice of change of solicitors on 27 June 2016, and on 4 August 2016 an application to list the matter on the commercial list, together with a commercial list statement.  The application was returnable in the Supreme Court on 26 August 2016, though apparently it did not proceed that day, and a judge of that court suggested that the matter might be transferred to the District Court.  Apparently in response to that suggestion, on 22 September 2016 a registrar made an order by consent that the plaintiff have leave to amend its claim in certain terms, and the proceeding be transferred to the District Court at Brisbane.  On 26 October 2016, another application was filed by the plaintiff, this time to list the matter on the commercial list in the District Court, returnable on 31 October 2016.  

36. On that occasion the matter came before me.  I drew attention to the fact that it appeared to me that, pursuant to the District Court of Queensland Act 1967 s 145, the District Court did not have jurisdiction in the matter, and invited the parties to consider signing a memorandum consenting to jurisdiction under s 72 of that Act. Such a memorandum was filed on 24 January 2017, and when the matter came before me again on 10 February 2017 I placed it on the commercial list, gave directions for an amended defence to the most recent amended statement of claim, and a reply, and listed the matter for review on 10 March 2017. On that day I made an amendment to the earlier order which deleted a paragraph I had intended to delete from the draft order but had omitted to do so, set the matter down for trial on 21 August 2017, and extended the time for the further pleadings. On 12 July 2017 there was an application by the plaintiff for orders including for further disclosure and for further amendments to the statement of claim, which came before Jones DCJ and was dismissed by his Honour. The trial proceeded on 21 August 2017.

37. It will be apparent from this summary that there has been a degree of activity during most of the time since the proceeding was commenced.  The proceeding has not been conducted with great efficiency, but it seems to me that the total time taken is by no means solely attributable to the plaintiff.  On the face of it, while the matter remained in the Supreme Court, at any time from February 2013 it was open to the defendant to have the matter listed for further directions because of the failure to file the request for trial date under the consent order of 31 October 2012, but that step was never taken.  Although there were three versions of the statement of claim filed over the years, there were five versions of the defence filed, one of which included the counterclaim which was subsequently abandoned.  It is true that shortly before the trial there was a further attempt to re-plead to deal with the difficulty caused by the option, and that was unsuccessful.  The costs of that have already been dealt with by Jones DCJ on 19 July 2017, ordering that the plaintiff pay the defendant’s costs. 

38. My impression from the file is that, on occasions when the matter has not been pressed forward by the plaintiff, the defendant has been content to allow it to drift; there have never been any applications made by the defendant to have the matter proceed more expeditiously.[16]  This is certainly not a case where the defendant has taken advantage of any steps available to it to press the matter forward, or to bring the matter to a conclusion.  The comments of King CJ in Werlick (supra) are apposite. No doubt the delay has been caused in part by attempts by the plaintiff’s advisors to find a way around the difficulty posed by the terms of the option. To the extent that this has put the defendant to additional costs, it has its remedy under the rules, by UCPR r 692(2),[17] and by the order of Jones DCJ. 

    [16]Indeed, I do not think there has ever been any application at all by the defendant.

    [17]See also Michael Vincent Baker Superannuation Fund Pty Ltd v Aurizon Operations Ltd [2017] 2 Qd R 761 at [18] – [21].

39. The plaintiff has in fact been kept out of its money for many years, has suffered the disadvantage of inflation during that period, and conversely the defendant has had the advantage of not having to pay the money during that period.  It can hardly strengthen the defendant’s argument that as it happens in this case the defendant is in a much better financial position to meet the judgment now than it would have been at the time when the plaintiff’s loss was actually suffered.[18] 

    [18]On the evidence before me, the present judgement could easily be met out of one year’s operating profit.

40. Overall I am not persuaded that, in all the circumstances, it is appropriate in this case to limit the period in respect of which interest is allowed to the plaintiff.  I am not persuaded that the defendant has shown that the test referred to earlier has been met.  Indeed I am not persuaded that either limb of the test has been met, since there is no basis upon which I can see that the defendant has been financially prejudiced by any delay which has occurred.  It was submitted that the rates of interest under the practice direction are well in excess of commercial rates, and that for that reason it would be unjust to the defendant to order interest on that basis.  No evidentiary basis for the submission was put before me. 

41. For most of the relevant period interest under the practice direction has been calculated with reference to reserve bank rates, with a loading of 4%: Supreme Court Practice Direction 7 of 2013, which also applies to the District Court.  As it states, this reflects an agreement to establish nationally uniform rates for such interest.  In Keeley v Horton (supra) this was referred to at [13], where Burns J went on to say: “In the absence of contrary evidence, the prescribed rates are generally accepted as satisfying the need for economic loss to be compensated by an award of interest on the principal debt at ordinary commercial rates.  They should therefore be applied to the damages awarded in the first appellants’ favour as varied by this Court.”  It is common, if not usual, for Queensland courts to award interest under s 58 at the default rate under the practice direction.  In view of this decision, it would not be right for me to find, without evidence, that the prescribed rates are well in excess of commercial rates, as submitted, so that such interest would be unjust to the defendant. 

42. It is true that, prior to 19 April 2013, the prescribed rate was the arbitrary 10%; on that day it came down to 7% under the new formula.  But there is no evidence about commercial rates in respect of the period prior to that date either, and for what it is worth, my recollection is that interest rates were generally higher then than more recently.  In any case, this submission is not made out, for want of evidence.  Accordingly I am not persuaded to vary the order for interest that I previously made.

Costs

43. The plaintiff was successful in the proceeding, albeit in a limited amount, and prima facie therefore is entitled to its costs of the proceeding: UCPR r 681. Although the plaintiff was not successful on all issues, particularly in relation to quantum, the modern trend is against awarding costs separately in respect of separate issues rather than by reference to overall success or failure.[19]  Besides, most of the time occupied during the trial was spent on the numerous allegations by the defendant of breach of contract on the part of the plaintiff, on most of which the defendant was unsuccessful.  The expert accounting evidence was longer than it would have been if the option period had been disregarded, and fewer financial documents would have been put before the court, but there was very little evidence specifically in relation to the issue of whether the option was valid.  My impression is that if the matter had been contested only in relation to quantum the trial would have been completed in one day, saving considerable costs.  Prima facie therefore costs follow the event.

    [19]Alborn & Ors v Stephens [2010] QCA 58 at [8] per Muir JA; BHP Coal Pty Ltd v O & K Orenstein & Koppel AG (No 2) [2009] QSC 64 at [7] per McMurdo J; Murdoch v Lake [2014] QCA 269 at [20] per Morrison JA.

44. The amount recovered was more than the maximum amount which could have been recovered by a proceeding in the Magistrates Courts at the time this proceeding was commenced.[20]  Although the Magistrates Courts have since had their monetary limit increased by legislation in 2010, that amendment applied only to proceedings commenced after the 1 November 2010: Magistrates Court Act 1921 s 60. Accordingly at no time has a Magistrates Court had jurisdiction to give the plaintiff the relief I found the plaintiff was entitled to have in this proceeding. UCPR r 697, which limits costs which could be obtained if the judgement could have been given in a lower court, applies by reference to the situation when the proceeding began. On the other hand, if the proceeding had remained in the Supreme Court, prima facie r 697 would have led to the result that the plaintiff’s costs would have been assessed as if the proceeding had been started in the District Court.

    [20]Magistrates Courts Act 1921 reprint 5B, s 4: the limit was $50,000.

45. This matter was transferred from the Supreme Court to the District Court.  The Civil Proceedings Act 2011 s 33(2) provides that in that situation costs are in accordance with the scale of costs for the court in which the proceeding was pending when the costs were incurred. Hence costs prior to the transfer to the District Court would be assessed on the Supreme Court scale unless I order to the contrary. In circumstances where, had the matter remained in the Supreme Court, prima facie r 697 would have meant that the costs would have been assessed as if the proceeding had been started in the District Court, it is appropriate that I order under s 33 that the costs of this proceeding while it was in the Supreme Court be assessed as if the proceeding had been started in the District Court. That is consistent with the submission on behalf of the plaintiff. The submission on behalf of the defendant was made without regard to the terms of the Magistrates Courts Act 1921 s 60, and accordingly is unhelpful on this point.

46. The plaintiff also relied on an offer to settle which was made on the plaintiff’s behalf on 24 July 2017. This was an offer expressed to have been made in accordance with chapter 9 part 5 of UCPR, although a covering letter also relied on the principle in Calderbank v Calderbank [1976] Fam 93. The plaintiff offered to accept $31,000.00 plus interest calculated from 28 February 2010 to the date of the offer, and costs on the standard basis. The offer was open for consideration for 14 days as required by the rules. It was made after the matter had been set down for trial, and after Jones DCJ had dismissed the plaintiff’s application to make further amendments to the pleading.

47. The offer included some provisions about the mechanics of acceptance, including a consent order to vacate the trial date and signing a notice of discontinuance, and also provided that if the offer was accepted payment be made within seven days of acceptance, except in respect of costs which would be paid within 28 days of the agreement or assessment of the costs.[21] The presence of the condition about payment is not a difficulty; UCPR r 353(1) expressly contemplates that an offer may be on conditions. The offer was not accepted by the defendant. Indeed, on 27 July 2017 a letter from the solicitor for the defendant advised of instructions not to accept the offer, and made a counter-offer to pay a much smaller amount, and small fixed amounts by way of interest and costs. One of the terms of the counter offer was that all previous costs orders be vacated. Among other things that would have had the effect of vacating the order in favour of the defendant made by Jones DCJ on 19 July 2017. Even allowing for this, the offer was much less generous to the plaintiff than the plaintiff’s offer, and very much less generous than the outcome of the proceeding. Despite the prompt counter-offer, the formal offer remained opened for acceptance, but was not in fact accepted.[22]

    [21]Read literally cl 3 of the offer provides something different which does not make sense, but the reference was obviously to completion of the costs assessment by either method set out in para 1(c).

    [22]UCPR r 358(2), (3).

48. It is obvious that the order obtained by the plaintiff in the proceeding was no less favourable than the offer; indeed the basic judgement sum was more than twice the amount of the offer, and interest and costs would be much higher, since the costs will include the costs of the trial. I have no difficulty in being satisfied that the plaintiff was at all material times willing and able to carry out was proposed in the offer. It follows that pursuant to r 360(1) prima facie I must order the defendant to pay the plaintiff’s costs of the proceeding calculated on the indemnity basis. The plaintiff’s written submissions about costs, however, does not seek costs of the whole proceeding pursuant to the rule, but in effect concedes that costs on the indemnity basis should be limited to the period after the expiry of the time during which the offer was open for acceptance, no doubt because the offer had been made at a relatively late stage in the overall proceeding. Nevertheless, this represents a significant concession to the defendant from the prima facie position under the rule.

49. The defendant’s submissions in relation to costs assert that the relief obtained could have been obtained in the Magistrates Court, which is inconsistent with section 60 of the Act, referred to above. Reference was made to UCPR r 692(2), which has consequences in relation to the costs of the amendments made to the plaintiff’s pleading, and which applies notwithstanding any order for costs made generally in relation to the proceeding. It also means that in some respects the plaintiff recovers costs occasioned by the defendant’s amendments of its pleading.

50. The defendant submitted that the plaintiff should only recover its costs on the standard basis in respect to that part of its claim which was successful. The plaintiff’s claim was for damages for breach of contract. To the extent that rectification was claimed in the statement of claim, ultimately that relief was not pressed, and no significant amount of time at the trial was spent on that point. Essentially that part of the claim on which the plaintiff was successful was the claim for damages for breach of contract, which for all practical purposes was all of it. The only thing said specifically about why an order for indemnity costs was not appropriate under the rule was that the offer to settle included costs on the District Court scale, when costs should only have been recovered on the Magistrates Courts scale. That proposition overlooks s 60 referred to earlier, and is therefore wrong. It follows that no good reason has been advanced for not making the order for indemnity costs pursuant to r 360 to the limited extent sought on behalf of the plaintiff.

51. Even if for some reason r 360 did not apply, the offer to settle also stands as a Calderbank offer.  An unreasonable failure to accept an offer of settlement can be the basis of an order for indemnity costs incurred after the offer was made.[23]  In my opinion it was unreasonable to fail to accept that offer, bearing in mind that the amount sought as damages for breach of contract was less than the $33,177.00 ultimately adopted for economic loss by the defendant’s expert accountant in his third report, Exhibit 19, disregarding the option period.  The plaintiff was offering to take a sum less than the defendant’s expert had assessed as the amount of its damages on the assumption that the option was invalid. 

    [23]J & D Rigging Pty Ltd v Agripower Australia Ltd [2014] QCA 23; Hadgelias Holdings Pty Ltd v Seirlis [2014] QCA 325; Kitchen v Vision Eye Institute Ltd [2017] QCA 32.

52. The only realistic expectation the defendant could have had of doing better than that was if it succeeded on liability.  It will be apparent from the reasons given in the principle judgement that the defendant’s case in relation to liability was in my view always quite optimistic. Any objective assessment of the defendant’s prospects ought to have produced the conclusion that the plaintiff was very likely to be successful on liability.  The High Court has rejected the proposition that reasonableness for the rejection of an offer can be found in the vicissitudes of litigation.[24] In the circumstances, in my opinion it was clearly unreasonable for the defendant to have failed to accept this offer, and if an order for indemnity costs had not been appropriate under r 360, I would nevertheless have ordered the defendant to pay the plaintiff’s costs on an indemnity basis after the expiration of the period for acceptance of the offer, on the Calderbank principle.

    [24]Stewart v Atco Controls Pty Ltd(No 2) (2014) 252 CLR 331.

53. In these circumstances, it is probably unnecessary for me to refer to the fact that a number of issues as to the plaintiff’s performance of the contract were raised by the defendant without any proper justification, not infrequently without any justification at all.  Most of these allegations were a complete waste of time, particularly my time in having to deal with them in preparing my reasons for judgement.  Even if liability was not going to be conceded, if the defendant’s case on liability had been confined to those matters on which there was some plausible basis able to be put forward, the trial would probably have finished in two days.  If the defendant were not paying all of the costs of the trial on the indemnity basis anyway, I would have ordered the defendant to pay the costs of the last two days of the trial on that basis, because the defendant’s conduct of the defence wasted the time of the plaintiff and the court.

54. The order for costs therefore is that the defendant pay the plaintiff’s costs of the proceeding, to be assessed as if the proceeding had been started in the District Court, on the standard basis up to 7 August 2017, and from 8 August 2017 on the indemnity basis. That will automatically pick up any costs which have been reserved, or made the plaintiff’s costs in the proceeding, but will not affect the operation of r 692(2).