Skyrock Sun Pty Ltd v Brades Property Agnes Water Pty Ltd & Ors

• [3] The defendants resist such an order and have submitted that the appropriate order would be that the defendants pay 30% on the plaintiff's costs of and incidental to the proceeding on a standard basis.

Plaintiff's submissions regarding the Side Deed

• [4] In support of its submissions, the plaintiff relies heavily upon cl 5(1) of the Side Deed[2] which was entered into by the parties on 12 August 2022 which relevantly stated:

"In consideration of the Buyer, at the Guarantor's request, entering into and agreeing to be bound by this side agreement (the Agreement) with the Seller and releasing the deposit under the Contract as a loan (the loan) on the terms set out in clause 2.2 the Guarantor:[3]

1. Undertakes to indemnify the Buyer and keep the Buyer indemnified against any failure by the Seller to repay the loan whether or not the same is enforceable by the Buyer against the Seller."

• [5] The plaintiff submits that this clause provides that the Guarantors offered a general indemnity to reimburse the plaintiff for any loss, damage or liability arising from Brades Property's failure to repay the loan and that there is no limitation to what the indemnity would entail. It follows, so it is submitted, that in circumstances where the plaintiff was required to bring this proceeding to recover payment of the loan, the indemnity would include the plaintiff's legal expenses.
• [6] The plaintiff then submits that, on the basis of what it describes as the "plain and unambiguous" contractual agreement, its cost of the entire proceedings should be paid by the defendants on the indemnity basis.

• [7] As the defendants have quite correctly submitted, the interpretation of a contract commences by reference to the natural, ordinary meaning of the words used, by reference to the text, context, and purpose of the contract.[4] The starting point is always the plain, ordinary meaning of the language that is used in the particular clause under consideration.
• [8] With that approach in mind, it is immediately apparent that the plaintiff's construction of clause 5(1) is incorrect as it is not supported by the ordinary natural meaning of the language used in the clause, the effect of which is:

(a) clause 5(1) contains a limited indemnity concerning the repayment of the loan "(as described in the Side Deed)" and contains no indemnity in respect of "loss, damage or liability"; and

(b) the wording of the clause does not plainly and unambiguously provide for costs to be recovered by the plaintiff, let alone on the indemnity basis.

• [9] The language of clause 5(1) makes clear that the second and third defendants have undertaken to keep the plaintiff indemnified against any failure by the first defendant to "repay the loan". The "loan" under the Side Deed was the deposit of $220,000 released to the first defendant.
• [10] The indemnity operates only in respect of the repayment of the loan, and the plaintiff's submission that there is "no limitation to what the indemnity would entail" can only be categorised as wishful thinking, and is quite inconsistent with the plain, ordinary language of the clause. That is further emphasised by the absence of any reference in clause 5(1) to "costs" or "legal expenses".
• [11] In Platinum United II Pty Ltd v Secured Mortgage Management Ltd (in liq),[5] clause 15.1 within the relevant agreement read:

"The Borrower shall indemnify and keep indemnified the Lender against any loss, expense or tax which the lender may reasonably sustain, incur or be required to pay as a consequence of the enforcement of all or any of the securities under all or any of the Transaction Documents."

• [12] In relation to the language used in that clause, Fraser JA (with whom Chesterman JA and Fryberg J agreed) found at [6]:

"It is doubtful whether cl 15.1(C) of the Agreement confers an entitlement to have costs assessed on the indemnity basis in sufficiently clear terms to justify the exercise of that discretion ... ."

• [13] A second clause was also considered in Platinum (cl 17.4(a)), which relevantly stated:

"The Borrower shall indemnify and upon demand reimburse the Lender for all legal fees on an indemnity basis, documentary costs and out of pocket expenses including and without limiting the generality of the foregoing all other expenses of the Lender in connection with the ... enforcement of all Transaction Documents."

• [14] In relation to cl 17.4(a), his Honour Fraser JA found:[6]

"... the expression 'on an indemnity basis' in cl 17.4(a) clearly comprehends 'the indemnity basis of assessment' of costs ..."

• [15] Notably, in relation to cl 17.4(a) in Platinum, the clause referred expressly to "legal fees" and that they are recoverable "on an indemnity basis".
• [16] Similarly, in Cape Byron Power No. 1 Pty Ltd & Ors v Downer Energy Systems Pty Ltd & Ors[7], the relevant clause read:[8]

"As a separate undertaking, the Guarantor unconditionally and irrevocably agrees that, on receipt of written demand from the Principal, it will indemnify the Principal against all losses, damages, costs (including legal costs on a full indemnity basis and the costs of enforcing this Guarantee and Indemnity), expenses or otherwise which may be incurred by it by reason of ..."

• [17] The defendants have submitted that the language of cl 5(1) of the Side Deed is in stark contrast to the plain and unambiguous wording of the clauses considered in Platinum and Cape Byron Power, and provides no authority to recover costs.
• [18] I agree that the language of cl 5(1) does not state that the plaintiff is entitled to recover its costs of legal proceedings concerning the recovery of the "loan", and accordingly is not entitled to an order for costs, whether on an indemnity basis or otherwise, under cl 5(1).

• [19] In the alternative, the plaintiff relies upon r 681 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) which states that costs of a proceeding "... are in the discretion of the court but follow the event, unless the court orders otherwise," and submits that as the plaintiff was successful at trial, the discretion ought be exercised in favour of granting its costs.
• [20] The plaintiff also relies on the fact that it made an offer to settle the proceedings for $260,000[9] on 13 June 2024, which was not accepted by the defendants, in circumstances where the plaintiff has obtained an order no less favourable than that offer and where the court would be satisfied that the plaintiff was at all material times willing and able to carry out what was proposed in the offer.
• [21] The plaintiff accordingly submits that pursuant to r 360 UCPR, unless the defendants show that another order for costs is appropriate in the circumstances, the court must order the defendants to pay the plaintiff's costs calculated on the standard basis, up to and including the day of the offer, but calculated on the indemnity basis after the day of service of the offer.
• [22] In that regard, the plaintiff submits that it has satisfied the requirements under r 360(1) UCPR and that it was reasonable, in that it was comprised of the principal sum of $220,000 plus $37,583.78 interest (at the 10% per annum rate allowed under the Side Deed) calculated to the date of the offer. It submits that the balance of $2,416.22 would have hardly covered Skyrock's legal costs up to the date of the offer, which included the cost of an interlocutory application to compel the defendants to provide its disclosure,[10] which again reflects the reasonableness of the offer, because Skyrock was willing to compromise on its legal fees as at the date of the offer.

• [23] The plaintiff further submits that the fact that it did not succeed on its ACL claim should not result in an apportionment of costs.
• [24] In that regard it relies on the following statement by Applegarth J in Vision Eye Institute Ltd & Anor v Kitchen & Anor (No. 3):[11]

"The parties accept that in exercising its discretion in relation to costs, the court is entitled to take an impressionistic and pragmatic view as to what were the real heads of controversy in the litigation and will strive to avoid assessment of costs in a complicated form, according to issues in the technical sense. However, this does not detract from the general rule that costs follow the event, or relieve a party which seeks to invoke the discretion under r 684 from the requirement to identify the 'particular question' in a proceeding, or the 'particular part' of a proceeding, in respect of which the court is asked to make an order for costs."

• [25] The plaintiff submits that there was an overlapping issue between the contract and the debt claim on the one hand and the ACL claim on the other which related to the representations made by Brades Property to Skyrock, particularly in relation to the number of lots. It submitted that, notwithstanding that the defendants conceded that the number of lots representation was made, such concession only occurred less than a week before the trial commenced (and then only in written submissions), and that the plaintiff therefore prepared for trial on the basis that the number of lots representation was an issue.
• [26] Ultimately, the plaintiff submits that there were significant overlapping issues especially in relation to the representations (of which one was determinative of the plaintiff's success at trial), and the way the matter was run by the defendants, such that there is no definable or severable portion of the trial which could give rise to an apportionment of costs.

• [27] The defendants submit that where an issue or issues are definable, severable, and occupied a significant portion of the proceeding, an appropriate costs order should apportion or "net off" the portion of costs related to matters on which the party was successful.[12]
• [28] It is further submitted that the court should not exercise its discretion in accordance with r 360 UCPR to award the plaintiff indemnity costs on the basis of the offer of 13 June 2024 because another order is appropriate in the circumstances. Namely, that the defendants pay to the plaintiff 30% of the plaintiff's costs of and incidental to the proceeding on a standard basis.
• [29] They submit that such an order is appropriate because:

(a) the issues on which the plaintiff was unsuccessful are defined, severable, and occupied a significant portion of the proceeding;

(b) these were issues which the plaintiff ought to have known would be unsuccessful due to the plaintiff's evidence not being likely to come up to proof; and

(c) the defendants' rejection of the plaintiff's offer was not unreasonable.

• [30] Finally, the defendants submit that the plaintiff's submission that it is not possible to apportion costs because of "overlapping issues" should not be accepted, because, with the possible exception of the Lot Number Representation (as that term is used in the defendant's trial submissions), all issues were severable and distinct.

• [31] The plaintiff was unsuccessful in respect of its ACL claim and in respect of two of the three issues relating to the contract/debt claim, and, in each instance, the basis for the failure of those claims, as identified in the reasons for judgment, were factual matters within the plaintiff's knowledge.
• [32] Furthermore, whilst there was some overlapping of issues between the limbs of these claims, they were, as is demonstrated in the reasons for judgment, relatively minor. I therefore do not accept the plaintiff's submission that it is not possible to apportion costs because of "overlapping issues". I agree with the defendants that the only overlapping issue was the Lot Number Representation which was relied upon in both the ACL and the contracts claim, but otherwise the issues were quite distinct.
• [33] The question then becomes, to what extent was the preparation for the proceeding and the proceeding itself taken up by issues upon which the plaintiff was ultimately unsuccessful. The defendants submit that a costs order requiring them to pay 30% of the plaintiff's costs would appropriately reflect that issue. They submit that by reason of pursuing issues that had no prospects of success, the:

(a) trial took longer than it otherwise would have; and

(b) costs incurred were greater than would otherwise have been the case.

• [34] Whilst I agree with the basis of that submission, in my view, given the factual commonality between the issues, had the plaintiff proceeded only on the issue which was ultimately successful, it would, in all likelihood, have halved both the amount of preparation required and the time spent in trial.
• [35] A 50% reduction would therefore be appropriate.
• [36] That then leaves the issue of whether an order for costs on the indemnity basis should be made from 14 June 2024 onwards.
• [37] The defendants submit that the plaintiff's offer was not capable of acceptance as its terms lacked clarity in material respects, namely:

(a) the settlement sum of $260,000 was not broken down within the plaintiff's offer to indicate what portion is the deposit, or the interest representative of any costs;

(b) pursuant to its terms, the sum of $220,000, being the loan amount together with interest of approximately $37,000 still leaves the sum of approximately $3,000 unaccounted for, as the offer was made on the basis that there be no order as to costs; and

(c) at the time the offer was made, the defendants were not in a position to assess the plaintiff's prospects of success as no mediation had occurred and no "lay evidence" had been filed.

• [38] For these reasons, it is submitted that it was not possible for the defendants to assess the plaintiff's case as anything more than arguable and accordingly, their rejection of that offer was not unreasonable.
• [39] However, in my opinion the defendant's submission is rather disingenuous. At the time the offer was made, the defendants had knowledge of all facts relevant to the ultimately successful basis of the plaintiff's claim. As at the date of that offer:

(a) the parties had exchanged pleadings;

(b) the plaintiff had delivered a list and a supplementary list of documents;

(c) the defendants had delivered a list of documents;

(d) the plaintiff had filed an application and supporting material (in September 2023) to compel the defendants to deliver supplementary disclosure, which was ultimately resolved by consent;

(e) the defendants had delivered supplementary disclosure; and

(f) the plaintiff had briefed, and obtained an expert town planning report from the town planning expert witness, Mr Alan Irvin, and served that report on the date of the offer.

• [40] Furthermore, to suggest that the offer was not accepted, even in part, because of the unexplained approximate sum of $3,000 begs credulity, particularly where there is no suggestion that the defendants sought clarification from the plaintiff in relation to that issue. The defendants' position in that regard is not advanced by the submission that the proposed settlement sum did not include any amount for costs, because the offer came with the condition that:

"Within 7 days after receipt of the Settlement Sum in full by our client, the parties will do all things necessary to dismiss the Proceeding with no order as to costs."[13]

• [41] That condition, however, when read in the natural, ordinary meaning of the words used by reference to the full text of the offer, simply meant that if the offer was accepted then neither party would seek any order for costs from the Court. It did not mean that the amount of the settlement offer did not incorporate some costs. That fact was quite evident from the plaintiff's solicitor's letter which accompanied the offer of settlement.
• [42] It follows that I am of the opinion that the defendants' rejection of the offer was not reasonable.
• [43] Therefore, pursuant to r 360 UCPR, I am satisfied that:

(a) the plaintiff made an offer that was not accepted by the defendants;

(b) the plaintiff obtained an order no less favourable than the offer; and

(c) that the plaintiff was at all material times willing and able to carry out what was proposed in the offer.

• [44] In those circumstances it is appropriate that the defendants pay 50% of the plaintiff's costs calculated on the indemnity basis from 14 June 2024, as no other order is appropriate in the circumstances.

• [45] The defendants are ordered to pay 50% of the plaintiff's costs of and incidental to the proceeding on the standard basis up to 13 June 2024 and on the indemnity basis from 14 June 2024 onwards.

[1] Schedule II of the Competition and Consumer Act 2010 (Cth).

[2] A copy of the Side Deed appears at pp 261-266 of Ex. JSM-1 to the Affidavit of Jae Shim Min filed 28 March 2025.

[3] The Guarantor was Phillip James Brades and Brades PI Pty Ltd.

[4] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 at [46] per French CJ, Nettle and Gaudron JJ.

[5] [2011] QCA 229.

[7] [2023] QSC 109.

[9] Affidavit of Damien Donald Quick filed 31 October 2025.

[10] Affidavit of Damien Donald Quick filed 31 October 2025.

[11] [2015] QSC 164 at [13].

[12] BHP Coal Pty Ltd v O&K Oranstein & Koppel AG (No. 2) [2009] QSC 64 at [8] per McMurdo J.

[13] Ex. DDQ-6 to Affidavit of Damien Donald Quick filed 31 October 2025.