Octolake Pty Ltd v 202 Ltd

[4] However, the plaintiffs primarily seek an order for indemnity costs from 19 October 2021, for the following reasons.

[5] The plaintiffs commenced the proceeding on 8 October 2021 by filing an originating application, in which they relevantly claimed specific performance of what they claimed to be the defendant's obligation to buy the shares the subject of the proceeding under the 1989 deed. The application was supported by two substantial affidavits sworn by Mr Greg Johnston.

[6] Before the return date of the application, Mr Gilchrist swore an affidavit raising several factual disputes and the defendant contended in correspondence that the proceeding ought to have been commenced by claim instead of by originating application.

[7] The plaintiffs contend that, until Mr Gilchrist's affidavit was served on them, they did not consider that there was likely to be a factual dispute, as none had been raised in correspondence before the proceeding was commenced. But, more relevantly, the principal dispute raised by Mr Gilchrist in his affidavit was an assertion that Mr Johnston had acted in breach of his duties as a director of Aquatec, causing loss to the defendant. Mr Gilchrist said he had instructed the defendant's solicitors to bring a counterclaim for recovery of the amount it had paid to Mr Johnston and for breach of his duties as a director.

[8] The plaintiffs' solicitor now deposes that, as a consequence of the allegations in that affidavit, the plaintiffs agreed that there would be clear factual disputes in the proceeding. On 21 October 2021, Judge Rafter SC ordered that the proceeding continue as if commenced by claim and that the defendant pay the plaintiffs a fixed amount of costs thrown away as a consequence. I am told that that order was made by consent, although it does not itself say so.

[9] In its defence and in its counterclaim, the defendant never made assertions based on the facts alleged by Mr Gilchrist in that affidavit. The plaintiffs now contend that, if it were not for those allegations, the matter could have continued to a trial on the originating application. The allegations were akin to allegations of fraud that were clearly baseless given that the defendant never pursued them. As a result, additional expense and delay have been caused in prosecuting the proceeding as if commenced by claim. The defendant's contentions in Mr Gilchrist's affidavit ought never to have been made and were groundless, unduly prolonging the proceeding. Therefore, the defendant ought pay the plaintiff's costs from the date on which Mr Gilchrist's affidavit was served (19 October 2021).

[10] The defendant contends that there would be no justification to make such an order. It is speculative whether, absent those allegations, the proceeding would have been determined promptly on the originating application. It is unlikely that it would have, as the defendant had raised other factual disputes in its solicitors' correspondence with the plaintiffs' solicitors and in the affidavits filed on its behalf. They alone made it appropriate that the proceeding continue as if commenced by claim.

[11] In my view, while it may have been appropriate originally to commence the proceeding by originating application, a more careful consideration of potential issues and of discussions that the parties had had earlier would have made it likely, if not obvious, that there would be factual disputes that merited pleadings and disclosure. It is likely that the proceeding would have continued as if commenced by claim in any event. It was not only the allegations of wrongful conduct by Mr Johnston that would have had that result.

[12] I do not consider that Mr Gilchrist's conduct in making those allegations in fact caused the change in the nature of the proceeding. While the defendant did not make them in the proceeding, it raised other grounds of defence, both factual and legal, as shown in my reasons for judgment.

[13] Consequently, I consider that the defendant should pay the plaintiffs' costs up to and including the date of the plaintiffs' formal offer on the standard basis.

[14] The parties have agreed on the interest that should be awarded up to the date of judgment.

[15] The parties have also agreed that the allegations made in Mr Gilchrist's affidavit ought be concealed in some manner. The plaintiffs contend that the entire affidavit should be removed or sealed up, or the relevant paragraphs ought be struck out. In the latter case, the parties have not agreed exactly on which paragraphs ought be concealed. I consider that an order striking out the relevant paragraphs and concealing them is the appropriate way to put into effect the objective that they not remain on the public record.

[1] Octolake Pty Ltd v 202 Ltd [2026] QDC 19.