Pacific Formwork (Aust) Holdings Pty Ltd v United Rentals Australia Pty Ltd

1. Pacific Formwork (Aust) Holdings Pty Ltd and United Rentals Australia Pty Ltd have been embroiled in a lengthy dispute over nine shipping containers owned by United and abandoned on Pacific’s property by a third party, Wridgways Pty Ltd, when it went into liquidation during the COVID pandemic. Pacific does not dispute that United owns the containers. However, before releasing them, it sought reimbursement for the cost of removing them from the property and storing them after Wridgways abandoned its lease. United did not agree to pay the costs sought by Pacific. An impasse was reached and United brought proceedings against Pacific in the Magistrates Court claiming damages for trespass, conversion or detinue and, in the alternative, delivery of the containers. Pacific brought a cross-claim seeking payment of its storage and removal costs.

2. Both claims were dismissed by the Chief Magistrate: United Rentals Australia Pty Ltd v Pacific Formwork (Aust) Holdings Pty Ltd [2023] ACTMC 30. Her Honour initially ordered that each party was to bear its own costs unless submissions were received to the contrary. After receiving further submissions, noting her finding that United’s common law claims were ill-conceived, her Honour awarded Pacific its costs of the proceedings until 8 September 2022 (the date on which Her Honour had ruled on that issue). Her Honour noted that, after that date, the sole issue to be determined was the reasonableness of the costs Pacific required United to pay before collecting the containers. Having found at [100] that Pacific’s position as to those costs was “evidentially untenable”, her Honour ruled that United should have its costs from 9 September 2022 to 20 April 2023, when final submissions were filed. Her Honour rejected an application for a special costs order and ordered that the costs awarded would be on a party/party basis.

3. Both parties appealed. Both appeals were dismissed by me: Pacific Formwork (Aust) Holdings Pty Ltd v United Rentals Australia Pty Ltd [2025] ACTSC 143. I ordered that each party was to bear its own costs unless submissions to the contrary were received by a nominated date (subsequently extended).

4. In submissions filed pursuant to those orders, United noted that there is an existing costs order in its favour. On 20 July 2023, Senior Registrar Kennealy ordered Pacific to pay United’s costs of a strike-out application on the ordinary basis. That order stands.

5. United now seeks the following orders: (1) that Pacific pay United’s costs of the appeal (other than the costs ordered by Senior Registrar Kennealy) on an indemnity basis from 2 December 2023; (2) If the parties are unable to reach an agreement in relation to the costs as outlined at order one above, the costs to be taxed.

6. Order (2) is unnecessary as that is the position that obtains in any event.

7. Pacific supports my original order that each party bear its own costs. United’s submissions

8. United acknowledges that the costs of a proceeding are at the discretion of the court: r 1721(1) of the Court Procedures Rules 2006 (ACT). Its application for indemnity costs from 2 December 2023 is based on the fact that Pacific did not accept an offer made in a Calderbank letter (named after Calderbank v Calderbank [1975] All ER 333) sent by United on 1 December 2023, shortly before the hearing of the appeal. United submits that the failure to accept the offer amounts to special circumstances warranting the making of an order for indemnity costs in its favour. While expressly identifying its offer as a Calderbank letter rather than an offer of compromise under the rules, United’s submissions refer to r 1012(2)(b)(i) to support its contention as to the date from which indemnity costs should be paid. That rule addresses the date from which indemnity costs are presumptively payable in the case of a failure to accept an offer of compromise under the rules. In referring to that rule, I did not understand United to suggest that its Calderbank letter qualified as an offer of compromise under the Rules.

9. United noted that, in determining whether a special costs order should be made following the failure to accept an offer contained in a Calderbank letter, the issue is whether it was unreasonable for the offeree not to accept the offer: ACT v Gillan; Gillan v ACT [2019] ACTSC 200 at [30] (Penfold J).

10. The Calderbank letter stated that United was willing to resolve the entirety of the proceedings on the following terms: (i) within seven days of acceptance of the offer, Pacific was to give United access to recover its nine shipping containers; (ii) United was to pay Pacific $30,000 inclusive of legal costs on collection of its containers; (iii) the parties would thereafter execute and file consent orders dismissing the entirety of the proceedings, including the appeal and cross-appeal, with no orders as to costs

11. The letter explained the reasons United considered its offer to be “more than reasonable”. One reason asserted that the Chief Magistrate was satisfied that Pacific’s claim for costs was “unreasonable in all respects”. While the Chief Magistrate did find that the costs claimed by Pacific were not arrived at on a proper basis, her Honour also noted that there was an absence of evidence as to what costs were in fact incurred. She did not rule out the possibility that some costs might reasonably have been incurred.

12. Separately, United’s Calderbank letter contended that the offer it conveyed was reasonable because United was compromising “the entirety of its incurred costs… a significant proportion of which would otherwise be recoverable from [Pacific] if its appeal is dismissed and the cross-appeal upheld, as we expect”. However, United’s expectation was not met. Pacific’s appeal was dismissed, but so was United’s cross-appeal. United persistently maintained that its common law claims were not barred by force of s 32 of the Uncollected Goods Act 1996 (ACT). That contention was rejected by the Chief Magistrate and her Honour’s ruling was upheld by me.

13. In its submissions in support of the present application, United repeated its contention that its Calderbank letter represented a genuine attempt to compromise the dispute because, by the time the letter was sent, United had incurred significant costs in relation to the Magistrates Court proceedings and on the appeal. However, so had Pacific. While Pacific did not respond to the Calderbank letter within the time nominated by United, it did respond with its own offer on 12 December 2023, the day before the hearing of the appeal. Pacific’s letter stated that it had incurred $125,690 in costs and disbursements in the proceedings in the Magistrates Court and noted that those costs were the subject of a costs order in its favour. United’s letter did not quantify its costs.

Pacific’s submissions

14. Pacific accordingly submits that there are no special or unusual features in this matter that warrant an alternative order to be made by the Court. Pacific notes that both parties attempted to resolve the matter before the appeal was heard in their exchange of Calderbank letters. Pacific did not accept United’s offer because United maintained its arguments that its common law claims were not barred by the Uncollected Goods Act and that Pacific was not entitled to rely upon the Act at all. Pacific considered United’s position on those issues to be unreasonable. I respectfully agree, for the reasons explained in my primary judgment (and, with respect, by the Chief Magistrate before that).

15. Separately, Pacific contends that the amount of $30,000 offered by United, which was expressed to be inclusive of legal costs, was “far below” the amount claimed by Pacific for storage costs and legal costs, the larger part of which were said to be the subject of the costs order in favour of Pacific.

16. Pacific further noted that its counter-offer had been made at a time when its submissions in reply to the cross-appeal had been filed, so that United should have been aware of its position.

17. I am not persuaded that United has established any basis for a special costs order, or indeed for an order requiring Pacific to pay any portion of its costs. Fatal to the efficacy of United’s Calderbank letter in the circumstances of the present case is its expression as an offer “inclusive of legal costs”. Against the history of internecine litigation between these parties, it is impossible to be satisfied as to whether it was unreasonable of Pacific not to accept that offer. The offer was premised on United’s confidence that its common law claims were not barred by the operation of the Uncollected Goods Act. It was United that commenced proceedings to prosecute those misconceived claims.

18. In all the circumstances, I remain persuaded that the appropriate order is for each party to bear its own costs. As already noted, the order made by Senior Registrar Kennealy on 20 July 2023 requiring Pacific to pay United’s costs of United’s strike out application stands.

Orders

19. For those reasons I make the following orders: (1) United’s application for a special costs order is dismissed. (2) United is to pay Pacific’s costs of that application as agreed or assessed on the ordinary basis. (3) The order made on 11 April 2025 that each party is to bear its own costs of the appeal is otherwise confirmed.

I certify that the preceding nineteen [19] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice McCallum. Associate: Date: