Devpro v Seamark P/L & Anor

Lindwall Schweikert Lawyers for the first defendant

[1] WILSON J: Last December I ordered the first defendant to pay the plaintiff $1,106,154.11[1] made up as follows -

The plaintiff and the first defendant have now delivered written submissions on costs. The second defendant has declined to do so.

[2] The plaintiff seeks an order that the first defendant pay its costs on the indemnity basis from the commencement of the proceeding or alternatively from 28 September 2004.

[3] The first defendant submits that the plaintiff -

"a. Should not be awarded any of its costs of the proceedings on the indemnity basis against the First Defendant;

b. Alternatively, should not be entitled to those costs incurred at the trial as a result of the issues set out in paragraph 5,[2] whether on a standard or indemnity basis;

c. Alternatively, save for that part of the Plaintiff's costs referred to in paragraph 1(b), should be awarded its costs of the proceedings on the indemnity basis against the First Defendant only from 23 November 2005; and

d. Alternatively, save for that part of the Plaintiff's costs referred to in paragraph 1(b) should be awarded its costs of the proceedings on the indemnity basis against the First Defendant only from 28 September 2004."[3]

[4] The court has a discretion to award costs on the indemnity basis, but it requires some unusual or special feature to justify a departure from the usual order for standard costs.[4] The making of an offer by a letter expressed to be "Without Prejudice except as to Costs" (a Calderbank offer[5]) is a relevant factor, as is an imprudent refusal of such an offer.[6]

[5] In a letter dated 14 September 2004 and marked "Without Prejudice except as to Costs" the plaintiff offered to accept $800,000 with each party to bear its own costs. The offer was open for acceptance for 14 days from the service of the offer.

(i) At the time that offer was made, there was no quantum meruit claim, although one was foreshadowed in the letter.

(ii) The amount of the offer was considerably less than the amount of the Development Fee as ultimately assessed by the Court.

(iii) Interest on the Development Fee to the date of the offer would have been approximately $76,000.

(iv) The offer was not expressed to be made under part 5 of chapter 9 of the Uniform Civil Procedure Rules 1999 (Qld) ("UCPR").

[7] Even though the plaintiff ultimately recovered more for the Development Fee than the amount offered, since the offer was not made under part 5 of chapter 9 of the UCPR, it has no prima facie entitlement to costs on the indemnity basis.

[8] Subsequently the plaintiff largely recast its statement of claim by an amended pleading filed on 4 October 2004, and it amended it again on 25 November 2004. The first defendant has submitted further that the plaintiff raised unpleaded issues at trial.[7]

[9] Because of the early stage of the litigation at which it came, and the subsequent course the pleadings took, I am unpersuaded that the rejection of the Calderbank offer was imprudent or that that offer otherwise affords a sufficient basis to warrant an order for indemnity costs.

[10] The plaintiff made a subsequent offer on 23 November 2005, expressed to be pursuant to part 5 of chapter 9 of the UCPR. It offered to accept $661,205.48 and costs assessed on the standard basis. The offer was expressed to be conditional on acceptance by the second defendant of the sum of $180,328 in settlement of any claim the second defendant might have to the settlement amount.

[11] However, no such claim by the second defendant was raised on the pleadings. In the circumstances, the offer was not one capable of acceptance within the meaning of the UCPR. Further, there is no evidence whether the second defendant was willing to accept the offer. The first defendant's refusal to accept it does not entitle the plaintiff to indemnity costs.[8]

The first defendant's submissions on unpleaded issues

[12] The first defendant has submitted that there were issues raised at trial which were not part of the plaintiff's pleadings at any time, and that it should therefore not be required to pay the costs of the trial that relate to these issues -

"a. the Development Cost component of the judgement [sic] and the issue of what would have been the reasonable costs of construction of the project the subject of the proceedings;

b. the question of a reasonable amount to have been paid to Boss Constructions for variation work;

c. whether there was a basis for payment of $231,000 paid in satisfaction of a prolongation claim and whether that payment should be allowed; and

d. that certain of the tenant incentives were double counted because they appeared in the variations paid to Boss Constructions."[9]

However, the plaintiff always claimed the Development Fee, an essential component of which was the Development Cost. The matters listed in para 5 of the first defendant's submissions all relate to the Development Cost, which I think was fairly always in issue.

[13] I therefore reject the first defendant's submission that it ought not be required to pay the costs of those parts of the trial which relate to the issues discussed in para 5 of its submissions.[10]

[14] I am not satisfied that there are any special features of this case which would justify departing from the usual rule as to costs.

[15] I order the first defendant to pay the plaintiff's costs of and incidental to the proceeding assessed on the standard basis.

[16] I make no order as to the second defendant's costs of and incidental to the proceeding.

[1] Devpro v Seamark P/L & Anor [2006] QSC 392.

[3] First defendant's submissions on costs, [1].

[4] Colgate Palmolive Co Pty Ltd v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225, 233 (Sheppard J).

[5] see Calderbank v Calderbank [1976] Fam 93.

[6] Pirrotta v Citibank Ltd (1998) 72 SASR 259, 267; Interchase Corporation Ltd v ACN 010 087 573 Pty Ltd [2000] QSC 13 (23 June 2000), [28]-[31] (White J); Westpac Banking Corporation v Commissioner of State Revenue [2004] QSC 19, [23], [30]-[32] (White J).

[9] First defendant's submissions on costs, [5].