PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS –
COSTS – GENERAL RULE: COSTS FOLLOW EVENT – GENERAL
PRINCIPLES AND
EXERCISE OF DISCRETION – where the primary judgment found that the
Source
Original judgment source is linked above.
Catchwords
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS –COSTS – GENERAL RULE: COSTS FOLLOW EVENT – GENERALPRINCIPLES ANDEXERCISE OF DISCRETION – where the primary judgment found that theplaintiffs were entitled to specific performance– where the outstandingissue is costs – where the defendants have not delivered any costssubmissions – whereplaintiffs where entirely successful at trial –where the plaintiffs argue that costs should follow the event – whetherthe defendants should pay the plaintiffs’ costs of the proceedingsPROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS –COSTS – INDEMNITY COSTS – POWER TO ORDER –where theplaintiffs seek their costs on an indemnity basis – where the provisionsin the contract entitle the plaintiffs totheir legal costs of the proceeding onan indemnity basis – where the contractual entitlement to claim indemnitycosts is tiedto damages claim – where no damages were awarded because the
orders for specific performance were sufficient – where
the terms of the
contract plainly and unambiguously provide for costs on an indemnity basis
[1] On 23 June 2025, I ordered that the contract between the parties be specifically performed in this proceeding.[1] I held that Mr and Ms Storey were entitled to specific performance of the contract in which they contracted to buy a property at Parrearra on the Sunshine Coast.
[2] The outstanding issue is costs.
[3] On 25 June 2025, I ordered that the parties deliver any costs submissions by 2 July 2025. The defendants did not comply with that order. On 22 October 2025, I gave the defendants a further seven days from 22 October 2025 (to 29 October 2025) to deliver any costs submissions. The defendants did not deliver their submissions on that date. By email to my Associate on 29 October 2025, Ms Britton sought an extension of a further 14 days from 29 October 2025. That extension was objected to by the plaintiffs. Ms Britton took no further steps to apply for an extension. In any event, 14 days from 29 October 2025 has expired and the defendants have not delivered any costs submissions.
[4] The general rule is that the costs of a proceeding are in the discretion of the court but follow the event, unless the court orders otherwise.[2]
[5] The Storeys were entirely successful at trial.
[6] Prior to the trial, Mr Britton adopted a different stance to Ms Britton. However, by the time of the trial Mr Britton had altered his course and aligned his case with Ms Britton's case. Both defendants opposed specific performance and argued that the contract had been validly terminated.
[7] As counsel for the Storeys submits, there is no reason for the court to depart from the usual position, namely, that costs follow the event.
[8] The next question is whether the costs should be assessed on an indemnity basis or on a standard basis. The Storeys seek costs on the indemnity basis because of the provisions of the contract.[3] On the failure of the Brittons to settle, the Storeys as the buyers affirmed the contract. That affirmation then had the consequence that, pursuant to clause 9.3 of the contract terms, the Storeys were entitled to sue the Brittons for damages, or specific performance, or damages and specific performance. The Storeys entitlement to damages was dealt with in more detail in clause 9.8 which provides that:
[2]
"The Buyer may claim damages for any loss it suffers as a result of the Seller's default, including its legal costs on an indemnity basis." [emphasis added]
[3]
[9] Thus, on its plain terms, clause 9.8 would entitle the Storeys to their legal costs of the proceeding on an indemnity basis.
[10] The accepted principle is stated in Chen v Kevin McNamara & Son Pty Ltd (No. 2):
[4]
"An agreement to pay costs will be construed as an agreement to pay costs on a party and party basis, unless it is plain from its terms that costs are to be paid on a 'special basis.' Wherethe terms plainly and unambiguously provide for costs to be assessed on some special basis, the court will take such a provision into account but it is not bound to give effect to any extra-curial contract as to costs. An agreement to pay costs on a 'special' basis is only a factor informing the exercise of the court's discretion, but not requiring the exercise of that discretion in a particular way. Generally however, where the parties have unmistakeably agreed to the making of a special costs order, such a term will be given effect to unless there is some other discretionary consideration that militates against the making of such an order."[4] [emphasis added]
[5]
[11] Here, by clause 9.8 of the contract the parties have plainly and unambiguously elected that, in these circumstances, the Storeys would be entitled to their costs on an indemnity basis. It is relevant to note that, had the situation been reversed and it was the Storeys who had failed to complete their obligations, then the Brittons would have been entitled to their costs on an indemnity basis.[5]
[12] Whilst there is a discretion, the parties' bargain about costs ought to be respected. Thus, in Platinum United II Pty Ltd v Secured Mortgage Management Ltd (in liq) Fraser JA observed that a court would usually exercise the discretion to award costs otherwise than on the standard basis so as to give effect to a contractual provision which 'plainly and unambiguously' provides for taxation of costs on another basis.[6]
[13] One similar case where indemnity costs were refused is Willmott v McLeay.[7] In that case Holmes JA (with whom Fraser and White JJA agreed) considered clause 9.7 of the standard REIQ contract which is an equivalent provision for the seller's damages. Clause 9.7 provided that the seller may claim damages for any loss it suffers as a result of the buyer's default, including its legal costs on an indemnity basis.
[14] The provision is substantially the same as clause 9.8 here. Clause 9.7 and 9.8 are mirror images, with clause 9.7 applying in the event of a seller's claim for damages and clause 9.8 applying in the event of a buyer's claim for damages. However, Willmott v McLeay is distinguishable. Under clause 9.7 and 9.8 of the standard REIQ contract, perhaps surprisingly, the contractual entitlement to claim indemnity costs is tied to damages claims. That is clear from the fact that clause 9.8 gives the buyer a right to claim damages as a result of the seller's default, including its legal costs on an indemnity basis. As Holmes JA pointed out, the drafting of the entitlement to claim indemnity costs is expressed as a component of damages for loss resulting from the default of the other contracting party.[8] That seems to arise from the idea that the entitlement is to claim damages, including indemnity costs. In Willmott v McLeay there was no claim for damages and so Holmes JA was not persuaded that the parties had contracted "" for payment of costs on an indemnity basis.
[15] Obviously enough, clauses 9.7 and 9.8 could be better drafted by ensuring that the claims to damages and the claim to indemnity costs were independent of each other.
[16] In Clancy v Carlson Dann DCJ distinguished Willmott v McLeay because in that case damages had been claimed and awarded.[10] I propose to adopt a similar approach here.
[17] Damages were claimed here as an alternative to specific performance. No damages were awarded because the orders for specific performance were sufficient for the Storeys. As explained in the principal judgment the main issue was whether the contract had been validly terminated or remained on foot.[11] The issue of damages was put aside. However, the entitlement to claim damages and indemnity costs remained.[12]
[18] In any event, applying the test in Chen v Kevin McNamara & Son Pty Ltd (No. 2), the terms of the contract here plainly and unambiguously provide for costs on an indemnity basis.
[19] The order will be that the defendants pay the plaintiffs' costs of the proceeding on an indemnity basis.