Baxbex Pty Ltd v Bickle (No 2) [2009] QSC 270 (20 August 2009)

Last Updated: 24 August 2009

SUPREME COURT OF QUEENSLAND

[1] When I gave judgment in this matter on 28 July 2009, the parties asked for time to put on further written submissions in relation to the question of costs. Those submissions have been received. The successful respondent seeks his costs of and incidental to the originating application to be assessed on the indemnity basis. The applicant does not oppose an order for costs being made on the standard basis, but argues that the costs ought not be assessed on the indemnity basis.

[2] In seeking an award of costs on the indemnity basis, the respondent relies particularly on correspondence which passed between the parties’ solicitors after this originating application was filed on 25 May 2009. The application was originally returnable on 17 June 2009, but on 11 June 2009 the respondent’s solicitors sent to the applicant’s solicitors a letter which was marked “without prejudice save as to costs”, and which said:

“We have now had the opportunity to take instructions and to consider the matter. It is our opinion that your client will be unsuccessful in obtaining judgement for the amount that it has claimed. The dispute will have to proceed to trial.

However, in order to avoid incurring any unnecessary legal costs our client has given instructions that if your client informs us by 4:00pm Friday, 12 June 2009 that it is prepared to consent to an order that its Originating Application returnable next Wednesday, 17 June 2009 be dismissed and further will agree to directions for trial, our client will not pursue your client for any legal costs in respect of the Originating Application and bear its own costs of the Application. Similarly, your client bears its own costs of the Application.

However, if by 4:00pm Friday, 12 June 2009 your client has not informed us that it will consent to the dismissal of the Originating Application on the terms set out in the proceeding paragraph our client will forthwith prepare for the hearing next Wednesday, 17 June 2009 and will prepare his Affidavits for delivery to your client. In that event, our client will be seeking costs of the Application from your client on an indemnity basis (viz on a solicitor and client basis). Our client reserves his right to provide a copy this letter to the court on an application for costs.”

[3] On 12 June 2009, the applicant’s solicitors responded, saying:

“Thank you for your letter of 11 June 2009.

You do not state the basis upon which you assert that our client would be unsuccessful in obtaining Judgment. Does your client dispute that the provisions of the Building and Construct Industry Payments Act have been complied with?

In our respectful view, it would appear clear that a Payment Claim has been issued and as no payment schedule was provided by your client, that pursuant to Section 18 of the Act your client now becomes liable. Our client is asserting its right pursuant to Section 19 of the Act to recover the amount then due as a debt owing.

It is our respectful view that the failure by your client to deliver a payment schedule is fatal. See for example decisions such as Cant Contracting Pty Ltd v Casella [2006] QSC 242.

Further, we draw your attention to s.19(4)(b) and note that your client is not entitled to bring any counterclaim or raise any defence in relation to this matter.

We note further that in order for a Judge to give consideration as to whether indemnity costs would be ordered, he would need to be satisfied that our client properly advised would have accepted your offer. At this time we see no basis and accordingly await your further correspondence, if any, regarding the matter.”

[4] On 15 June 2009, the respondent’s solicitors wrote back, saying:

“We refer to your facsimile transmission of 12 June. The purpose of our letter of 11 June was to afford your client an opportunity to withdraw. As your letter in response correctly surmises our client contends that there has been inadequate compliance with the provisions of the Building and Construction Industry Payments Act 2004 .

Your letter correctly surmises issues that demand strict compliance.”

[5] Later on 15 June 2009, the applicant’s solicitors responded, asking the respondent’s solicitors to “please articulate the respects in which our letter does not comply with the Act and we will take instructions from our client”.

[6] It would appear that there was no further elucidation forthcoming from the respondent’s solicitors.

[7] In arguing for an award of costs on the indemnity basis, the respondent pointed to my findings that the letter relied on by the applicant as constituting the “payment claim” did not comply with s 17 of the BCIPA, and that the applicant “should, or ought reasonably to have been aware, from the notice given by the respondent’s solicitors in their offer of compromise dated 11 June 2009 ... that their purported ‘payment claim’ pursuant to s 17 was not compliant”. The respondent sought to characterise the applicant’s refusal to compromise on the basis proposed by the respondent as an imprudent refusal of the respondent’s offer of compromise and conduct which was irresponsible in the conduct of this litigation. In that regard, the respondent pointed, in particular, to the following statement by Chesterman J (as his Honour then was) in Todrell Pty Ltd v Finch (No 2):

“The test which I myself adopted in [Emmanuel Management Pty Ltd (in liquidation) v Fosters Brewing Group Ltd [2003] QSC 299] , and others, was whether there was something irresponsible about the conduct of the losing party which exposed its opponent to costs which should, in fairness, be ordered on the indemnity basis. It is, of course, irresponsible to commence proceedings which cannot succeed because of a known legal impediment.”

[8] I do not think that it could fairly or properly be said that the applicant acted “irresponsibly” in persisting with this application when one has regard to the precise terms of the correspondence which passed between the solicitors. There was nothing in the respondent’s solicitors’ letter of 11 June 2009 to indicate the basis for the expressed opinion that the applicant would be unsuccessful in obtaining judgment. The applicant’s solicitors’ letter of 12 June 2009 specifically queried whether there was an issue as to compliance with the provisions of the BCIPA, but the terms of the respondent’s solicitors’ letter of 15 June 2009 in response were, at best, somewhat elliptical by referring to the applicant surmising a contention that there had been inadequate compliance with the provisions of the BCIPA. The applicant’s solicitor’s request that the respondent’s solicitor articulate the alleged non-compliance was not, on the material before me, responded to.

[9] In those circumstances, I would be loathe to make a finding that the applicant had acted “irresponsibly” in continuing to press the application. It would appear that the first occasion on which the precise complaints of non-compliance were squarely articulated was at the hearing before me. I therefore do not consider this to be an appropriate case to depart from the usual order concerning costs.

[10] The order will be that the applicant pay the respondent’s costs of and incidental to the originating application, to be assessed on the standard basis.