Waller Projects Pty Ltd v F.W. Estate Pty Ltd

PRACTICE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL RULE: COSTS FOLLOW EVENT - GENERAL PRINCIPLES AND EXERCISE OF DISCRETION - where the Court determined a trial of separate questions in relation to whether there was breach of fiduciary duties in the acquisition and development of a property - where the Court's determination of the separate questions meant the plaintiff's claims entirely failed - where it was uncontroversial that there should be judgment for the defendants on the plaintiff's claims - where the parties were in dispute as to whether the costs should be apportioned and as to the basis of the assessment of any costs - whether the plaintiff should pay the defendants costs of and incidental to the proceeding to be assessed on the standard basis

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS - GENERALLY - where the defendants made a formal offer to the plaintiff to settle the proceedings - whether the offer was made under r 361 of the Uniform Civil Procedure Rules 1999 - whether the plaintiff obtained an order that was more favourable to it than the offer - whether the offer had relevance as a Calderbank offer - whether another order for costs was appropriate in the circumstances

Uniform Civil Procedure Rules 1999 (Qld) rr 361, 361A, 681(1)

Bert v Red 5 Ltd [2017] QSC 8, cited

Calderbank v Calderbank [1976] Fam 93, cited

Carlyon v Town & County Pubs Pty Ltd (No 2) [2015] QSC 25, cited

Emanuel Management Pty Ltd (in liquidation) v Foster's Brewing Group Ltd [2003] QSC 299, cited

Gramotnev v Queensland University of Technology (No 2) [2018] QSC 81, cited

Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, cited

Reed v Smith (No 2) [2022] QSC 229, cited

Schofield v Hopman (No 2) [2017] QSC 324, cited

Speets Investment Pty Ltd v Bencol Pty Ltd (No 2) [2021] QCA 39, cited

Surfstone Pty Ltd v Morgan Consulting Engineers Pty Ltd [2015] QSC 322, cited

Waller Projects Pty Ltd v F.W. Estate Pty Ltd [2025] QSC 16, cited

Wiggins Island Coal Export Terminal Pty Ltd v Civil Mining & Construction Pty Ltd [2021] QCA 8; (2021) 7 QR 1, cited

D L K Atkinson KC, with K E Stoyle, for the plaintiff and defendants by counterclaim

M S Stewart KC, with D C Clarry, for the defendants and plaintiffs by counterclaim

Robinson Nielsen Legal for the plaintiff and defendants by counterclaim

AJ & Co Lawyers for the defendants and plaintiffs by counterclaim

• [2] The trial of separate questions in this proceeding was conducted over various dates in July and November 2024. On 28 January 2025, I delivered my reasons ("my primary reasons).[1] In these reasons concerned with costs, I have adopted the defined terms in my primary reasons.
• [3] At the trial of separate questions, Waller contended that the acquisition and development of the Jimboomba Property occurred in breach of fiduciary duties owed to it by Dowling Yeppoon and Mr Dowling. FW Estate was alleged to have knowingly participated in the breaches of fiduciary duty. Two separate sources were identified for the alleged fiduciary duties. The first was the General Agreement. The second was a relationship of mutual confidence between Waller, acting through Mr Quinn, and Dowling Yeppoon, acting through Mr Dowling. The Relationship case was the case based upon this second source.
• [4] Waller now accepts that all of its claims in the proceeding were predicated upon the existence of the fiduciary duties and that my answers to the separate questions mean that its claims entirely fail.[2] The counterclaim advanced by Dowling Yeppoon, Mr and Mrs Dowling and Dowling Developments was advanced on the premise that the General Agreement or QD Joint Venture was established by Waller. The answers to the separate questions mean that the General Agreement or QD Joint Venture were not established. It is uncontroversial that by reason of the answers to the separate questions there should be judgment for the defendants on Waller's claims. The counterclaim should also be dismissed.
• [5] As to the costs of the proceeding, the parties are in dispute as to whether the costs should be apportioned and as to the basis of the assessment of any costs.
• [6] The defendants adduced into evidence a formal offer to settle which they had made and was dated 29 July 2019 ("the offer"). The offer was in the following terms:

TAKE NOTICE that the First, Second, Third, Fourth, Sixth and Seventh Defendants offer to settle these proceedings in accordance with Part 5 of the Chapter 9 of the Uniform Civil Procedure Rules 1999.

The First, Second, Third, Fourth, Sixth and Seventh Defendants offer the following in full and final satisfaction of this proceeding (BS 6105/19):

1. The proceeding numbers BS 6105/19 be discontinued.
2. The Plaintiff and First Defendant bear their own costs of this proceeding (BS 6105/19), including their own costs from Supreme Court of Queensland proceedings BS 6161/19 which costs were made their costs in the cause in this proceeding (BS 6105/19) by the Order of the Senior Judge Administrator, the Honourable Justice Ann Lyons, dated 19 June 2019 and made in that proceeding (BS 6161/19).
3. The Second, Third, Fourth, Sixth and Seventh Defendants bear their own costs of this proceeding (BS 6105/19).

This Offer to Settle will remain open for acceptance for a period of fourteen (14) days from the date of service on the Solicitors for the Plaintiff. Acceptance of this Offer is to be in writing and is to be communicated to the Solicitors for the First, Second, Third, Fourth, Sixth and Seventh Defendants."

• [7] At the time the offer was made, r 361 of the Uniform Civil Procedure Rules 1999 ("the Rules") was in the following terms:

(a) the defendant makes an offer that is not accepted by the plaintiff and the plaintiff does not obtain an order that is more favourable to the plaintiff than the offer; and

(b) the court is satisfied that the defendant was at all material times willing and able to carry out what was proposed in the offer.

(2) Unless a party shows another order for costs is appropriate in the circumstances, the court must -

(a) order the defendant to pay the plaintiff's costs, calculated on the standard basis, up to and including the day of service of the offer; and

(b) order the plaintiff to pay the defendant's costs, calculated on the standard basis, after the day of service of the offer.

(3) However, if the defendant's offer is served on the first day or a later day of the trial or hearing of the proceeding then, unless the court otherwise orders -

(a) the plaintiff is entitled to costs on the standard basis to the opening of the court on the next day of the trial; and

(b) the defendant is entitled to the defendant's costs incurred after the opening of the court on that day on the indemnity basis.

(4) If the defendant makes more than 1 offer satisfying subrule (1), the first of those offers is taken to be the only offer for this rule."

• [8] It is noteworthy that the offer was expressed to have been made under the Rules, did not include any statement to the effect that it was made "without prejudice except as to costs" or in accordance with Calderbank[3] principles and made no reference to the prospect of the defendants seeking indemnity costs in the event the offer was not accepted.
• [9] Rule 361 over time has been the subject of various amendments. At a former time, namely at the time of Emanuel Management Pty Ltd (in liquidation) v Foster's Brewing Group Ltd,[4] r 361(1) contained the words "the plaintiff obtains a judgment that is not more favourable to the plaintiff than the offer to settle". The rule was then amended in 2014, the language changing to "the plaintiff does not obtain an order that is more favourable to the plaintiff than the offer". The term offer was defined to include a judgment. Nothing turns for present purposes on the change from judgment to order.
• [10] The Rules have since been changed again. The Rules now provide:

"361 Costs if offer by defendant - order obtained by plaintiff

(a) the defendant makes an offer that is not accepted by the plaintiff; and

(b) the plaintiff obtains an order that is less favourable to the plaintiff than the offer; and

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

(2) Unless a party shows another order for costs is appropriate in the circumstances -

(a) the court must -

(i) order the defendant to pay the plaintiff's costs, calculated on the standard basis, up to and including the day of service of the offer; and

(ii) order the plaintiff to pay the defendant's costs, calculated on the indemnity basis, after the day of service of the offer; and

(b) the plaintiff is not entitled to any costs after the day of service of the offer.

(3) However, if the defendant's offer is served on the first day or a later day of the trial or hearing of the proceeding then, unless the court otherwise orders -

(a) the plaintiff is entitled to costs on the standard basis to the opening of the court on the next day of the trial; and

(b) the defendant is entitled to the defendant's costs incurred after the opening of the court on that day on the indemnity basis.

361A Costs if offer by defendant - dismissal of plaintiff's

(a) the defendant makes an offer that is not accepted by the plaintiff; and

(b) the plaintiff's proceeding is dismissed; and

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

(2) Unless a party shows another order for costs is appropriate in the circumstances, the court must order the plaintiff to pay the defendant's costs -

(a) calculated on the standard basis, up to and including the day of service of the offer; and

(b) calculated on the indemnity basis, after the day of service of the offer."

• [11] In Reed v Smith,[5] I relevantly said about the relevant version of r 361(1), namely that which existed at the time of the offer:[6]

"The rule no longer uses the language '... the plaintiff obtains a judgment no less favourable than the offer' the later language was relied upon by Chesterman J in Emanuel Management Pty Ltd (in liquidation) v Foster's Brewing Group Ltd[7] in concluding that the then rule had no application in that case where the plaintiff had not obtained a judgment."

• [12] Notably, in Emanuel,[8] Chesterman J had said of the previous version of r 361 that the rule was "not applicable because the plaintiffs did not obtain any judgment". In Wiggins Island Coal Export Terminal Pty Ltd v Civil Mining & Construction Pty Ltd,[9] Holmes CJ[10] considered this part of the decision in Emmanuel and described the "significant change" made to r 361 in 2014 "likely to have been prompted by [Emanuel]" as being:

" ... to alter r 361 so that the basis for comparison was no longer whether the plaintiff had obtained:

'... a judgment... not more favourable... than the offer to settle',

but whether the plaintiff had failed to obtain a more favourable order, the comparison now required by the rule" (emphasis in original).

• [13] The defendants ultimately submitted that r 361 was not engaged. They sought to rely upon the offer as a Calderbank offer or as being relevant to the general costs discretion. Following the amendment of r 361 in 2014, there appears to have been some uncertainty as to whether r 361 applied where a plaintiff was wholly unsuccessful and did not obtain a judgment. A series of cases followed the conclusion in Emanuel, which as I have noted concerned a differently worded rule.[11] One such case was Carlyon v Town & County Pubs No 2 Pty Ltd.[12] In those cases, the court was apparently not advised of the amendments to r 361 since Emanuel. The defendants relied upon those cases in support of a submission that "rule 361 does not apply where the plaintiff will not obtain an order on its claim".[13] I reject that submission.
• [14] In Surfstone Pty Ltd v Morgan Consulting Engineers Pty Ltd,[14] P Lyons J, after having considered the amendment to r 361 and conscious of Carlyon v Town & County Pubs No 2 Pty Ltd,[15] expressed support for the conclusion that the amended version of r 361 applied where a plaintiff was wholly unsuccessful. I expressed a similar view in Reed v Smith (No 2).[16] In the Court of Appeal in Wiggins Island, Holmes CJ's reasons made it clear that the amendments in 2014 are to be regarded as significant amendments which were likely prompted by the outcome in Emanuel. The defendants' ultimate submissions directed to the amended version of r 361 was "... whether, the plaintiff does not obtain a judgment or order, the focus is still on the plaintiff obtaining something for r 361 to be engaged". The "something" was not articulated. The submission pays no regard to the amended language and, contrary to the observations of Holmes CJ in Wiggins, would suggest that the amendments in fact embrace, rather than were prompted by way of response to, the outcome in Emanuel. If the amendments were intended to embrace the outcome in Emanuel, there was no need for any amendment as the outcome in faithfully reflected the language of the then rule.

"The rules prescribe a specific regime for offers to settle; it is not inconsistent with their spirit to require that parties wishing to take advantage of that regime comply with the relevant rules. There is a value to providing parties with certainty. A party who receives an offer expressed to be made under the rules and conveying no intent that it be used for any other purpose should be entitled to rely on what it represents."

• [17] In its oral and supplementary written submissions, Waller seized upon r 361(2) as requiring the defendants to pay Waller's costs calculated on the standard basis up to and including the day of service of the offer. Waller further submitted that it should pay the defendants' costs on the standard basis but with a suitable carve out reflecting an apportionment of 30 per cent of the costs of the proceeding. Hence, Waller submitted for "another order for costs [being] appropriate" within the language of r 361(2). Waller submitted to the effect that it should not be required to pay 30 per cent of the costs of the proceeding because the defendants had failed on what was described as a "major issue" said to comprise late amendments to the defence which introduced issues as to representations alleged to have been made by the Quinns which gave rise to a right on the part of the defendants to rescind the General Agreement. I will refer to those late amendments as "the representations defence".
• [18] The introductory language of r 361(2) is important. Relevantly, the language is "[u]nless a party shows another order for costs is appropriate in the circumstances..." The rule countenances a party seeking to demonstrate that there is a more appropriate costs order other than that described by rr 361(2)(a) and (b). Although the defendants did not accept that the rule applied, the tenor of their submissions was to the effect that another order for costs was appropriate in the circumstances of the case, namely an indemnity costs order in the defendants' favour for all of the costs of the proceeding.
• [19] I am satisfied that another order for costs is appropriate in the circumstance. The order which is appropriate is that Waller pays the defendants costs of and incidental to the proceeding to be assessed on the standard basis. My reasons for reaching that conclusion may be set out as follows.
• [20] In the circumstances of this case, Waller in fact obtained no favourable answers in the trial of the separate questions. As I have earlier indicated, Waller now accepts that all of its claims in the proceeding were predicated upon the existence of the fiduciary duties and that my answers to the separate questions mean that its claims in the proceeding entirely fail.[20] The fact that Waller obtained no order in its favour is a relevant circumstance for the purpose of r 361(2), namely one that shows that another order is appropriate.

"... the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is granted in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.

As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice."

• [25] In Speets Investment Pty Ltd v Bencol Pty Ltd (No. 2) [2021] QCA 39, Bond J (with whom Sofronoff P agreed) distilled some relevant principles in the following manner:

"The word 'event' in the general rule is to be approached distributively with the consequence that it refers to the event of an issue or of each separate issue, if there is more than one, in the proceeding: Thiess v TCN Channel 9 Pty Limited (No 5) [1994] 1 Qd R 156 at 207-8; Interchase Corporation Limited (in liq) v Grosvenor Hill (Queensland) Pty Ltd (No 3) [2003] 1 Qd R 26 at 60-1 [82]-[84]; Sequel Drill & Blast Pty Ltd v Whitsunday Crushers Pty Ltd (No 2) at [3]-[7]; Allianz Australia Insurance Ltd v Swainson at [4]-[5].

It is important to recognise, however, that it does not follow from the foregoing that the application of the general rule should usually lead to costs orders which reflect different results on separate events or issues. The Court is given a broad discretion 5 and is specifically empowered to determine that some other order is more appropriate.

In practice, courts often take the approach of identifying heads of controversy or 'units of litigation' (rather than what might technically be regarded as issues on the pleadings) regarding success or failure on the head of controversy or unit of litigation as the criterion for awarding costs: see Thiess v TCN Channel 9 Pty Limited (No 5) at 207-8 and Chief Executive, Department of Transport and Main Roads v Cidneo Pty Ltd [2015] QCA 168 at [1].

The general approach is that there must be special or exceptional circumstances to warrant depriving a successful party of its costs and the mere fact that the successful party has been unsuccessful on some issues will ordinarily not be sufficient to do so: Courtney v Chalfen [2021] QCA 25 at [5]. On an appeal, for example, where a party has succeeded on one of two ways to the same outcome, the Court of Appeal might well regard the costs of the second way on which that party failed as not so distinct conceptually or practically as to warrant making a costs order which reflected that party's failure: Chief Executive, Department of Transport and Main Roads v Cidneo Pty Ltd at [1]. On the other hand, one circumstance in which it might be appropriate to award costs of a particular question or part of a proceeding is where that matter is definable and severable and has occupied a significant part of the proceeding: see Courtney v Chalfen, in which the Court of Appeal referred with approval to the decision of McMurdo J (as his Honour then was) in BHP Coal Pty Ltd v O & K Orenstein & Koppel AG (No 2) [2009] QSC 64 at [8].

Of course, it does not follow that an issues-based costs order should always be made in circumstances analogous to those described by McMurdo J in BHP Coal Pty Ltd v O & K Orenstein & Koppel AG (No 2). Where there are multiple issues which are determined in different directions as between the parties, a court might form an overall impression having regard to the significance of the issues, the way they were determined, and the amount of time and cost spent on them, and order one party to pay a proportion of another party's costs as a way to reflect fairly the parties' comparative success or failure in the outcome which was obtained. Courts often prefer to avoid the complicated form of costs assessment that would follow if different issues are determined in different directions as between the parties and costs were to be awarded in respect of issues. In this regard, in Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (No 2) [2019] NSWCA 173, the New South Wales Court of Appeal observed at [9] where taking such an approach might result in a protracted assessment process:

'... It is more efficient, and fairer, for the court simply to net-off [orders for issues in different directions as between the parties], which it is entitled to do (see Day v Humphrey [2018] QCA 321 at [13] per the court). Such an assessment will, undoubtedly be 'rough and ready' (Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [5]), and that is entirely permissible'."

• [26] Applying these principles, my reasoning in support of an order that Waller pays the defendants' costs of the proceeding on the standard basis is as follows:

(a) On any sensible and pragmatic view, there was one overarching "event" in this proceeding, namely whether the pleaded fiduciary duties existed. That is reinforced by the content of Waller's written submissions dated 22 April 2025 at paragraph 4. To the extent that other issues were involved, they were subsidiary issues. The defendants won the event.

(b) Paragraph 309 of my primary reasons deals with the introduction of the representations defence on the eve of the trial. I found that the representations defence was fanciful and contrived.[24] I am satisfied that, as a matter of pure pleading, the representations defence, involving, as it did, an assertion of a right to rescind might be regarded as "definable and severable". However, as a matter of reality and substance, a significant part of the evidence relevant to the representations defence, namely what disclosure had been made, was also relevant to the Relationship case, as Waller conducted that case at the trial. Waller chose to "enter into the arena" in respect of the representations defence by alleging that not only had there in fact been full disclosure of adverse financial information but that the disclosure which had occurred evidenced the relationship between the parties. I accept the defendants' submissions to the effect that the representations defence was raised very late in the proceeding in close proximity to the trial and that by the time of the trial Waller was not just denying that representations had been made but relying upon the financial disclosure which it did make to support the Relationship case. Relevantly:

(i) On 2 April 2024, in close proximity to the trial, the defendants amended the defence to relevantly allege that Waller (by Mr Quinn or otherwise) had not disclosed fully and frankly, or at all, the nature and extent of the financial difficulties of Mr Quinn and entities he controlled before about February 2014;

(ii) On 8 April 2024, Waller amended the statement of claim to deny that the financial difficulties had not been disclosed and positively asserted that Mr Quinn had made full and frank disclosure. Waller relied in its amended pleading on a new annexure F which detailed a litany of communications. The annexure included a detailed list of matters which Mr Quinn said he had communicated to Mr and Mrs Dowling at the 3 July 2011 meeting.

1. That there be judgment for the defendants on the claim.
2. The counterclaim is dismissed.
3. The full amount of the monies paid by the plaintiff into Court as security for the defendants' costs of the proceeding pursuant to the order of Boddice J dated 27 November 2019, together with any interest that has accrued thereon:

(a) be released to the defendants; and

(b) paid into a bank account nominated by the defendants' solicitors to the principal registrar of the Court within 14 days of the date of this order.

(a) the plaintiff, Waller Projects Pty Ltd (ACN 160 554 165);

(b) Clare Elizabeth Grenenger Quinn;

(c) Rhys James Grenenger Quinn;

(d) Gabrielle Johanna Quinn; and

(e) Lachlan Barclay Quinn;

pay the defendants' costs of the proceeding, including reserved costs on the standard basis.

[1] Waller Projects Pty Ltd v F.W. Estate Pty Ltd [2025] QSC 16.

[2] Waller's written submissions dated 22 April 2025 [3].

[3] Calderbank v Calderbank [1976] Fam 93.

[4] [2003] QSC 299 at [36].

[5] [2022] QSC 229 at [21].

[7] [2003] QSC 299 at [36].

[9] [2021] QCA 8; (2021) 7 QR 1 at 20.

[10] With whom Philippides JA agreed [83] and Brown J agreed on this point [84].

[11] Carlyon v Town & County Pubs No 2 Pty Ltd [2015] QSC 25, Bert v Red 5 Ltd [2017] QSC 8; Gramotnev v Queensland University of Technology (No 2) [2018] QSC 81, Schofield v Hopman (No 2) [2017] QSC 324 at [4] and [5].

[12] [2015] QSC 25.

[13] Defendants' submissions regarding UCPR r 361 dated 9 May 2025.

[14] [2015] QSC 322 at [11].

[15] [2015] QSC 25.

[16] [2022] QSC 229 at [21].

[17] Wiggins Island Coal Export Terminal Pty Ltd v Civil Mining and Construction Pty Ltd [2021] QCA 8; (2021) 7 QR 1 at [64].

[19] Again with whom Philippides JA agreed and Brown JA agreed on this point.

[20] Waller's written submissions dated 22 April 2025 [3].

[21] Primary reasons [254] to [261].

[23] [1998] HCA 11; (1998) 193 CLR 72 at 97 [67]-[68].

[25] CFI 156 at [29] and [181]-[194].