ABB Engineering Construction Pty Limited v Abigroup Contractors Pty Limited - [2003] NSWSC 867

No judgment structure available for this case.

CITATION: ABB Engineering Construction Pty Limited v Abigroup Contractors Pty Limited [2003] NSWSC 867

HEARING DATE(S): 12/09/03, 16/09/03 (further submissions)

JUDGMENT DATE:
24 September 2003

JURISDICTION:
Equity Division
Technology and Construction List

JUDGMENT OF: Einstein J

DECISION: Short minutes to be brought in.

CATCHWORDS: Principles - Interest - Costs - Judgment for causes of action abandoned

LEGISLATION CITED: Supreme Court Act
Supreme Court Rules

CASES CITED: Abigroup v Peninsula (No 2) [2001] NSWSC 1016
Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873
Australian Trade Commission v Disktravel [2000] FCA 62
Bennett v Jones [1977] 2 NSWLR 355
BP Exploration Co (Libya) Ltd v Hunt (No 2) [1983] 2 AC 352
Ciavarella v Balmer (1983) 153 CLR 438
Council of the City of Sydney v Woodward [2000] NSWCA 201
Cretazzo v Lombardi (1975) 13 SASR 4
Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261
Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2002] FCA 282
Falkner v Bourke (1990) 19 NSWLR 574
Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20
Heckenberg v Delaforce (No. 2) [2000] NSWCA 254
HomeOwners Insurance Pty Ltd v Job (1983) 2 ANZ Ins Cas 60-535
Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748
LMI v Baulderstone (No.2) [2002] NSWSC 72
Madden as Official Liquidator of Aquanaut Constructions Pty Ltd (in liq) [2001] NSWSC 1051
Mobile Innovations Ltd v Vodafone Pacific Ltd [2003] NSWSC 423
NRMA Ltd v Morgan (No 3) [1999] NSWSC 768
Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) Inc (No 2) [2002] FCA 967
Oshlack v Richmond River Council (1998) 193 CLR 72
Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589
Renard Constructions (ME) Pty Limited v Minister for Public Works (1992) 26 NSWLR 234
Smeaton Hanscomb & Co Ltd v Sassoon I Setty Son & Co (No 2) [1953] 1 WLR 1481
Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 28 ALR 201
United Australia Limited v Barclays Bank Limited [1941] AC 1
Waters v PC Henderson (Aust) Pty Ltd ( Kirby P, Mahoney and Priestley JJA, New South Wales Court of Appeal, 6 July 1994, unreported)

PARTIES :
ABB Engineering Construction Pty Limited (Plaintiffs)
Abigroup Contractors Pty Limited (Defendant)

FILE NUMBER(S): SC 55033/98

COUNSEL: Mr M Orlov (Plaintiff)
Mr F Corsaro SC (Defendant)

SOLICITORS: Abbott Tout (Plaintiff)
Clayton Utz (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND CONSTRUCTION LIST

Einstein J

Wednesday 24 September 2003

55033/98 ABB ENGINEERING CONSTRUCTION PTY LTD v ABIGROUP CONTRACTORS PTY LTD

JUDGMENT

The applications before the court

1 A number of matters remain to be resolved following the delivery of a reserved judgment in the proceedings on 30 July 2003 [2003] NSW SC 265:

· ABB's claims to interest pursuant to section 94 of the Supreme Court Act;

· Abigroup’s claim for an order for judgment in relation to matters abandoned by ABB during closing submissions before the Referee;

[The convenient course is to append to this judgment as Appendix "A" the claims asserted by the defendant to have been abandoned by the plaintiff]

· ABB's claims to costs of the proceedings.

ABB's claims to interest

2 Section 94(1) of the Supreme Court Act provides that in any proceedings for the recovery of money the Court may order that interest be included in the sum for which judgment is given at such rate as it thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date when the judgment takes effect. Section 94(2)(b) of the Supreme Court Act provides that this section does not authorise the giving of interest on any debt for which interest is payable as of right whether by virtue of an agreement or otherwise. Section 94 requires the Court to exercise a discretionary power in deciding to award interest: Falkner v Bourke (1990) 19 NSWLR 574; HomeOwners Insurance Pty Ltd v Job (1983) 2 ANZ Ins Cas 60-535; Bennett v Jones [1977] 2 NSWLR 355.

3 Both parties accept that the question for decision is what is the date or what are the dates from which interest should run. Once that question is decided the result is one of calculations.

ABB submissions

4 ABB submissions were as follows:

The plaintiff submits that a reasonable and appropriate approach to the exercise of the Court’s discretion is for interest to run from the later of the date on which ABB commenced these proceedings, namely 6 August 1998, and the date on which particular items of expenditure that ABB incurred in connection with the work were booked to the project, as recorded in ABB’s contemporaneous Jobpac cost records (Harrowell, paragraphs 7, 10).

· ABB commenced work at Abigroup’s request on 25 February 1998, each party expecting that ABB would receive payment for that work;

· ABB made progress claims for work done and materials supplied on and from 19 May 1998 and some of those claims were paid by Abigroup in part (Harrowell, paragraphs 3 - 4 and Annexures “A”-“E”);

· on 17 June 1998 ABB wrote to Abigroup asserting the absence of a contract and an entitlement to be paid on a quantum meruit basis for work done and for future work and requesting Abigroup to indicate whether it wished ABB to continue with the work (Harrowell, paragraph 5 and Annexure “F”);

· on 6 August 1998 ABB commenced these proceedings claiming an entitlement to be paid for work done and for future work on a quantum meruit basis;

· work continued (during which time ABB made further progress claims) until ABB was instructed by Abigroup to cease work on 14 October 1998 (Report 859). ABB continued to incur expenditure in connection with the project up to and after 14 October 1998 (Report 859-860, 898).

Abigroup knew and expected from the commencement of work that it was required to pay for the work ABB did. That knowledge and expectation was reinforced by ABB’s claims for payment and acknowledged by Abigroup making part payment of ABB’s progress claims. The fact that ABB was asserting an entitlement to be paid on a quantum meruit basis for work done and for future work was made known to Abigroup expressly on 17 June 1998 and confirmed by ABB commencing these proceedings on 6 August 1998 to enforce that entitlement.

As at 6 August 1998 Abigroup was aware that ABB was asserting a right to payment of a substantially greater sum for work done than ABB had been paid up to that time [As at 6 August 1998 ABB had made claims for payment of $2,672,395 and been paid $100,000 (Harrowell, paragraph 4)] and a right to payment for future work on a quantum meruit on the basis there was no contract between the parties. While the claim for payment had not been fully quantified as at 6 August 1998 and the final value of the claim would depend on the value of work done after 6 August 1998, substantial progress claims had been made prior to the commencement of the proceedings and further substantial progress claims were made on 20 August 1998, quantifying the total claim for work done to 31 July 1998 at $4,120,518, and on 20 September 1998 quantifying the total claim for work done to that time at $6,070,875 (Harrowell, paragraphs 3 - 4). Even if there was some uncertainty as at 6 August 1998 as to the precise amount that ABB claimed for work done to that time, that uncertainty was removed by the progress claim issued on 20 August 1998. Importantly however, on 6 August 1998, if not before, Abigroup knew that ABB was demanding payment of additional monies for work done. The fact that Abigroup may not have known precisely the amount claimed as at the date of commencement of the proceedings does not preclude interest from running from that date: Council of the City of Sydney v Woodward [2000] NSWCA 201 at [94].

ABB’s cause or causes of action for payment of a reasonable remuneration arose as and when ABB did the work and Abigroup accepted it. At that point (or at those points) Abigroup received a benefit in circumstances giving rise to an obligation to make restitution: Mason and Carter ‘ Restitution Law in Australia ’ [2722]; Council of the City of Sydney v Woodward [2000] NSWCA 201 at [94]. This occurred progressively from the date on which ABB commenced work in late February 1998. Against that background and the background of ABB’s claims for payment, the adoption of 6 August 1998 as the earliest date from which interest should run is conservative.

ABB’s entitlement to payment of a reasonable remuneration continued to accrue on and after 6 August 1998 as and when work was done and the benefit of that work was accepted by Abigroup. There was no need for ABB to make fresh claims for payment because a right to payment had been claimed in the proceedings commenced on 6 August 1998. [In fact a further claim for payment was made on 20 September 1998 in the sum of $1,950,357 (Harrowell, paragraph 4)] The value of the claim in the proceedings continued to accrue as work was done and money was expended in connection with the project. In those circumstances a reasonable and appropriate approach is to allow interest on expenditure incurred after 6 August 1998 from the date on which the expenditure was booked to the project, as recorded in ABB’s contemporaneous Jobpac cost records.

Abigroup's submissions

5 Abigroup's submissions were as follows:

Abigroup

6 August 1998; or

· ABB by its Summons filed on 6 August 1998 did not specify the amount it was claiming for work done and materials supplied (refer to paragraph 4 of the Affidavit of Craig Paul Pudig sworn 3 September 2003 ("Pudig Affidavit"));

· Abigroup was not informed of the amount ABB was claiming on a quantum meruit basis until it was served with ABB's Further Amended Summons filed on 14 September 1999 (refer to paragraph 6 of the Pudig Affidavit);

· as the Referee observed in his report some of the expenses incurred by ABB for work done by ABB were incurred after 14 October 1998 [Referee's Report pages 859.9; 899.2]. Therefore, as at 6 August 1998, work was continuing to be performed by ABB so that the performance of the relevant work by ABB had not ended;

· as Mr Collins QC said at T55 (annexure 1 of the Pudig Affidavit) in his opening address in relation to the Summons filed and served by ABB on 6 August 1998, before the Referee:

"After negotiations which had gone on for some months from February through to July, the plaintiff became concerned that there was some urgency about this matter and it wanted to approach the court seeking a declaration to resolve the uncertainty as to the contractual position, so it took out a summons which

simply sought a declaration that there was no contract and did not do much else.

" (our emphasis)

· interest pursuant to section 94(1) of the Supreme Court Act was not claimed by ABB until it filed its Further Amended Summons on 14 September 1999 (refer to paragraph 7 of the Pudig Affidavit);

· Abigroup was not made aware of the amount ABB was claiming on a quantum meruit basis until it filed and served its Further Amended Summons on 14 September 1999 (refer to paragraph 6 of the Pudig Affidavit);

· ABB did not serve evidence supporting its quantum meruit claim until on or about 21 December 1999 when it served Mr Radcliffe's report (refer to paragraph 8 of the Pudig Affidavit); and

· Annexure "G Revised" of the Second Harrowell Affidavit indicates that expenses were still being posted into ABB's ledgers in relation to this project in August 1999 (refer to paragraph 3 of the Pudig Affidavit).

Supreme Court Act

Dealing with the issue

6 In my view, the plaintiff’s submissions should be acceded to. The principles are as set out and applied in Council of the City of Sydney v Woodward [2000] NSWCA 201 at [94]:

because at that time the Council had received a benefit

So far as the Council submitted that where services are performed over a lengthy period, payment is usually made only after a demand, it does not follow that the statutory entitlement to interest should as a matter of discretion not commence until then

the plaintiff and the Council from September 1996 that the Council was obliged to pay the plaintiff something.

So far as the Council submitted that a delay in making a demand is relevant in assessing a reasonable time for payment, particularly when the sum demanded was not earlier known to the defendant, the submission is sound, and it is also the case that such a delay is relevant to the s 94 discretion

BP Exploration Co (Libya) Ltd v Hunt (No 2)

7 A reasonable and appropriate approach to the exercise of the Court’s discretion is for interest to run from the later of the date on which ABB commenced these proceedings, namely 6 August 1998, and the date on which particular items of expenditure that ABB incurred in connection with the work were booked to the project, as recorded in ABB’s contemporaneous Jobpac cost records (Harrowell, paragraphs 7, 10).

8 Abigroup received the benefit which it accepted as and when ABB did the work. This was occurring progressively from the date on which ABB commenced work in late February 1998.

9 ABB’s entitlement to payment of a reasonable remuneration continued to accrue on and after 6 August 1998 as and when work was done and the benefit of that work was accepted by Abigroup. I accept that there was no need for ABB to make fresh claims for payment because a right of payment had been claimed in the proceedings commenced on 6 August 1998.

10 Against the background set out in ABB's written submissions [set out above] and the background of its claims for payment I accept that the adoption of 6 August 1998 as the earliest date from which interest should run is conservative.

11 There is no substance in Abigroup's submission that in some instances interest was claimed where work was performed after an expense relating to that work was posted. Mr Orlov dealt with this suggestion as follows:

My learned friend's submission appeared to be an elaboration of something which appeared in the written submissions…the complaint…that was made in the defendant's written submissions was that costs continued to be incurred after the date of the commencement of the proceedings and, indeed, some point was made in fact that costs continued to be booked to the job until August 1999, which was obviously well after the work had been completed, and some point appeared to be made in relation to that in the defendant's written submissions. That really related to the issue of the booking of costs, not the proposition that costs were being booked to the job before they were actually being incurred.

There was no evidence at all in the proceedings that costs were booked to the job in advance of the costs being incurred, and so that the answer to the problem that your Honour raised is that in a theoretical sense what your Honour has said would be an appropriate way to deal with the matter; in a practical sense, one can search high and low but there is in fact no evidence to support my learned friend's contention, and the problem, in my submission, doesn't exist….

Now, the approach then was: Plainly one could not charge interest on work which continued to be done after that date, both up to the date on which ABB's involvement was terminated, that is 14 October, and also the other work carried out after 14 October involved in the disestablishment from the site. It would not be appropriate to charge interest on that from 6 August because at that stage the work hadn't been done…

So the approach that we outlined in the submissions was to say you take the later of the date on which - 6 August, or the date on which it was booked, and the reason the date on which it was booked was taken was that throughout the 12 months or so that the conclave proceeded between the experts, the basis upon which the parties proceeded, the basis upon which the experts proceeded, was that ABB's job pack record, which was a business records of the expenses incurred, was treated by the parties and by the experts as being a record of the expenses incurred on the job.

12 It seems to me that in the circumstances described by Mr Orlov there is no substance in Abigroup's submission that interest is claimed in respect of work performed after an expense relating to that work was posted.

Abigroup’s claim for an order for judgment in relation to matters abandoned by ABB during closing submissions before the Referee

ABB's claims to costs of the proceedings

13 The considerations relevant to these two brackets of claim overlap so that it is convenient to deal with both these matters at the same time, albeit recognising the entirely different underpinning which each of these claims has in terms of principle and application of principle. In short the Court is required to pay close attention to the claims which were advanced during the reference and to the forensic stances adopted by the respective parties at material times during the hearing of the reference in relation to what was pleaded, what was conceded, what was determined not to be pressed by way of pleaded cases and what was, in essence, litigated.

The principles underpinning the exercise of the discretion to award costs

14 It is convenient to commence with an examination of the principles which underpin the proper exercise of the discretion to award costs. In my view they were accurately set out in the following extract taken from Mobile Innovations Ltd v Vodafone Pacific Ltd [2003] NSWSC 423 at [4]-[6]:

Costs

· Costs are in the discretion of the Court which has full power to determine by whom and to what extent costs are to be paid: s76(1) Supreme Court Act 1970.

· The powers and discretions of the Court under s76 are to be exercised in accordance with SCR 52A: SCR 52A rule 4.

· If the Court makes an order as to costs, the Court shall order that costs follow the event except where it appears to the Court that some other order should be made as to the whole or any part of the costs: SCR 52A rule 11.

· Thus, the starting point is that plaintiff, having been successful, is entitled to its costs. It is for the defendants to establish a basis for departing from that rule.

· It is certainly the case that a successful party who has failed on certain issues may not only be deprived of their costs on those issues but may be ordered as well to pay the other party's costs of them Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 at 48,136.

· Notwithstanding that the Court has power to deprive a successful party of costs, or even order a successful party to pay costs, that is a course to be taken in unusual cases and with a degree of hesitancy. For example:

Cretazzo v Lombardi

"But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. ... I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues."

Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd

Hughes

Cretazzo

Trade Practices Commission v Nicholas Enterprises Pty Ltd

Waters v PC Henderson (Aust) Pty Ltd

“Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those in which it failed."

NRMA Ltd v Morgan (No 3)

Cretazzo v Lombardi

Hughes v Western Australian Cricket Association

Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd

Waters v P C Henderson (Australia) Pty Ltd

Doric Products Pty Ltd v Lockwood Security Products Pty Ltd

Australian Trade Commission v Disktravel

Cretazzo v Lombardi

· A recent application of the principle was by Barrett J in LMI v Baulderstone (No.2) [2002] NSWSC 72. In that case two plainly discrete claims were made by the plaintiff - a minor claim upon which the plaintiff was successful and the dominant claim upon which the defendant succeeded. His Honour considered the claims "were so separate and disassociated (although involving common witnesses) that I think they should be treated, for costs purposes, as if they had been the subject of separate trials".

· Where the principle is applied it is generally not appropriate to order that costs be paid in respect of particular issues because "that would create a degree of artificiality, and would impose an extraordinarily difficult task upon any registrar faced with the need to tax costs, in default of agreement": Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) Inc (No 2) [2002] FCA 967 (Weinberg J).

· Rather it is generally appropriate simply to apportion costs [SCR 52A rule 6(2)(a)] on the basis of "impression and evaluation: Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272; LMI at paragraph 36. Mathematical precision is not required and the court will not attempt to be too technical or exacting in seeking to allocate costs: Dodds Family Investments at 272; NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 (Giles J) at paragraph 25; Madden as Official Liquidator of Aquanaut Constructions Pty Ltd (in liq) [2001] NSWSC 1051 (Hamilton J) at paragraph 3; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22. Relevant factors include the relative time devoted to evidence and submissions on the competing issues: Hughes at 48-136; Waters at 5; Fexuto at 22-25; NRMA at paragraphs 31-47 and the relative success of the party in terms of its original claim: Abigroup v Peninsula (No 2) [2001] NSWSC 1016 (13 November 2001) at paragraphs 36-40; LMI at paragraphs 41-47.

Oshlack v Richmond River Council

"The discretion must be exercised judicially

Smeaton Hanscomb v Sassoon

"The arbitrator is not directing his mind to one of the most, if not the most, important of the elements which ought to affect his discretion, namely the result of the case. Prima facie, a successful party is entitled to his costs. To deprive him of his costs or to require him to pay a part of the costs of the other side is an exceptional nature."

The combined force of the sentiments recognised above by Mason CJ regarding the need for consistency in order to avoid injustice, and by Devlin J, regarding the most significant factor affecting the costs discretion, provides the juris prudential basis for the important principle commonly referred to as the 'usual order as to costs'.

The Usual Order as to Costs

The expression the 'usual order as to costs' embodies 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 grounded 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 beneficiary 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 necessary burden on the scarce resources of the publicly funded system of justice.

Anglo-Cyprian Trade Agencies v Paphos Wine Industries

"No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct."

'Misconduct' in this context means misconduct relating to the litigation or the circumstances leading up to the litigation. Thus the Court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purposes of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute.

Apart from anomalous examples in the Equity Jurisdiction, there are few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct. The Court may award costs in favour of a defendant where the plaintiff has obtained only nominal damages. However this practice can be justified on the basis that, in reality, the successful party lost the litigation and the unsuccessful party won. For present purposes it is not necessary to list any further exceptions to the principle of the usual order as to costs."

15 In Mobile Innovations, Vodafone took exception to the proposition that the principle was properly expressed in the sentence "Notwithstanding that the Court has power to deprive a successful party of costs, or even order a successful party to pay costs, that is a course to be taken in unusual cases and with a degree of hesitancy." Vodafone had submitted, and I am certainly content to accept, that caution needs to be exercised in a 'multiple issues' case, in terms of awarding the successful party all of its costs, where it has failed on a number of discrete issues, less an injustice be perpetrated against the unsuccessful party. [(cf Fexuto v Bosnjak Holdings (No 3) (1998) 30 ACSR 20 per Young J)].

The circumstances by reference to which the Court's discretion falls to be exercised

16 A deal of the general background concerning and scale of the reference is to be found shortly summarised in the 30 July 2003 judgment. The report of the referee is of course the appropriate place in which to find a proper and carefully laid out summary of the issues pleaded and litigated, of the stances taken by the parties from time to time, of the decisions both as to principle and findings of fact and of the reasons for those decisions.

17 The report of some 900 pages is part of the record. It is obviously inappropriate to now set out large sections from the report. Suffice it to say that during the course of the argument leading to the 30 July 2003 judgment I had occasion to travel through a number of sections of the Report in order to deal with the matters which were in issue on the adoption/rejection of the Report applications which were then before the Court.

18 Further and in order that the Court should be fully informed as to the manner in which the Reference hearing proceeded, as to the changing stances in pleadings and as to the precise reasons why each of the parties now so strongly presses its preferred approach in respect to costs, a full -day was set aside for the taking of oral submissions complementary to the earlier and detailed written submissions. The whole of the oral submissions were transcribed and form a convenient record of precisely how the matters were addressed, including the courts comments on many parameters of the approaches put by each party, tied back to relevant principle, and often to why a matter was pleaded or abandoned, and as to what effect a particular stance was said to have had upon the forensic approach to the adducing of evidence.

19 The plaintiff being the successful litigant should, all other things being equal, be entitled to an award of costs. This should follow from the "usual order as to costs", embodying the principle to which McHugh J referred in Oshlack. More than anything the approach taken by the litigants to the reference may be likened to a war. Leaving aside for the moment, the question of those areas where the plaintiff elected to abandon its claims, it seems that almost every point was taken which could have been taken by either litigant.

20 Clearly the Court should be astute to carefully examine such reasons as may be put forward as to why the proper exercise of the Court's discretion should not be for the successful litigant, here the plaintiff, to have its costs. I am able to indicate immediately that such reasons as the defendant sought to put forward, do not warrant any departure from the usual order as to costs.

21 Even in advance of summarising the respective submissions put by the parties it is appropriate to note that notwithstanding that the plaintiff on day 151 of the Reference and after the conclusion of the hearing before the Referee, indicated that it was not proceeding with but was abandoning particular claims which it had made in the Second Further Amended Summons [on the alternative basis that there was a contract], a thorough investigation by interrogation of counsel on the hearing of the instant application has entirely satisfied me that because of the way in which each side had pleaded and sought to litigate its respective case, it cannot be said that the abandoned claims meant that very much at all of the evidence which both sides adduced would not have had to be adduced in any event. The matter will be returned to be below.

22 In what follows, many of the plaintiff's written submissions are simply adopted. In particular I accept the following submissions as accurate summaries of the relevant landscape:

· the issue initially raised by the plaintiff in its summons was the question whether or not there was a contract between the parties. Those proceedings were taken with a view to declaring the rights of the parties which were, at that time, still actively engaged in the construction of the MUA project. The position changed when the defendant terminated the plaintiff’s involvement in the project on 14 October 1998. The litigation then evolved through successive amendments to the pleadings by both parties, which are summarised in the affidavit of Mr Harrowell, to include all of the parties’ respective claims and cross claims depending upon whether or not it was found that they had entered into a contract;

· the fundamental issue in the proceedings was the sum due from one party to the other, each claiming on alternative grounds that it was entitled to receive payment from the other;

· the plaintiff’s primary case was that the parties had not entered into a contract and that it was entitled to be paid for work done and materials supplied on a quantum meruit. Alternatively, if the parties had entered into a contract the plaintiff contended that the defendant had repudiated the contract and that it was entitled to payment of damages. The defendant contended that the parties had entered into a contract and that the plaintiff had repudiated the contract. The defendant cross claimed for substantial damages for the cost of completing the work commenced by the plaintiff and for consequential loss and damage suffered as a result. The claim was framed alternatively as a claim for damages for breach of contract and as a claim for damages for breaches of the Trade Practices Act;

· a significant feature of the litigation was that a finding that the parties had not entered into a contract carried with it the result that all of the claims and defences in the proceedings, by each party, that were founded upon the existence of a contract, would simply fall away. In the result, that is what happened;

· the plaintiff was wholly successful in its claim that the parties had not entered into a contract and in its claim for payment on a quantum meruit. The defendant was wholly unsuccessful in its cross claim. In part, that was because the Referee found that the parties had not entered into a contract, contrary to the defendant’s various alternative contract cases as pleaded and ultimately as run. Insofar as the cross claim was founded on allegations of misleading and deceptive conduct, the case failed because the defendant’s reliance witness was disbelieved and, independently, because the defendant failed to prove detriment.

· there was no discrete issue on which the plaintiff was unsuccessful. In that respect this case is entirely different to all of the cases in which courts have had to consider the exercise of discretion to apportion costs where a plaintiff has been partly successful on some issues and unsuccessful on others;

· all of the issues upon which the plaintiff ultimately did not proceed, were issues that would become relevant only if the Referee found that the parties had entered into a contract. If the plaintiff had pressed all of its pleaded alternative claims, even if only in a formal sense, the outcome of the proceedings would not have changed. As it was, the Referee did not decide any questions that depended upon a finding that the parties had entered into a contract. So, for example, the Referee made no findings in relation to the plaintiff’s alternative claim that if the parties had entered into a contract the defendant had repudiated that contract. Nor did the Referee make any findings in relation to the extensive factual issues raised by the defendant’s cross claim for damages for breach of contract. Nor did the Referee decide the plaintiff’s application for leave to amend the summons to substitute a claim for payment on a quantum meruit basis for its claim for damages for repudiation. Thus, if submissions had been made in relation to the issues upon which the plaintiff decided not to proceed, they would have joined a long list of other issues that the Referee did not decide, because he did not need to, having regard to his primary conclusion that the parties had not entered into a contract;

· following the completion of the cross examination of the defendant’s two main witnesses on the contract issue, Mr Owen and Mr Sleeman, plaintiff’s counsel took a robust view of the likelihood of success of the plaintiff’s principal claim that the parties had not entered into a contract. The subsequent conduct of the case was shaped accordingly, including that a number of the defendant’s witnesses were not required for cross examination and the issues dealt with in the submissions were limited, resulting in a substantial saving of time and costs. That approach to the case has been vindicated completely by the Referee’s findings on the principal issue which, as is apparent from the report, were influenced to a significant extent by adverse findings that the Referee made in relation to the credit of Mr Owen and Mr Sleeman. It also became apparent during the course of the hearing that, while a significant measure of agreement had been achieved by the parties’ respective experts in relation to the quantification of the plaintiff’s quantum meruit claim, there was a very wide divergence of opinions in relation to the contract value of the plaintiff’s work. The divergence was due largely to the difficulty of identifying the terms of any contract that the parties may have entered into and, particularly, how the risk of the incomplete and unsatisfactory design and documentation prepared by the defendant’s consultants was allocated between the parties. Against that background, the plaintiff decided to seek leave to amend to claim payment on a quantum meruit basis in substitution for its damages claim;

· the plaintiff is now criticised for that decision and the defendant seeks to escape the usual cost consequences that follow when a party has been wholly unsuccessful in litigation, as the defendant has been in this case. A significant matter that the defendant overlooks is that the written submissions on issues that were fought out before the Referee occupied many thousands of pages and took some six months to complete. If submissions had been made in relation to all of the alternative claims that depended upon the Referee finding that the parties had entered into a contract, the time and cost involved in completing the written submissions would have blown out even further. The end result would have been no different, except that the burden of costs ultimately to be borne by the defendant would have been further enlarged.

The defendant’s submissions

23 The defendant submissions were as follows:

The Court has the power to order that a party be entitled to a specified proportion of assessed costs (see Part 52A r6(2)(a) of the Supreme Court Rules ; Mobile Innovations Limited v Vodafone Pacific Limited [2003] NSWSC 423).

Part 15A of the Supreme Court Rules supports the approach which the Court should take in circumstances such as those which are extant in these proceedings.

In Mobile Innovations Limited (supra) , his Honour Mr Justice Einstein considered circumstances in which Mobile eschewed any claim for damages for repudiation at the hearing and did not tender the reports of a witness in which such damages were claimed. His Honour noted that the "expenditure on the work performed... was wholly wasted" . Accordingly, his Honour made orders that the costs of the proceedings be apportioned on a percentage basis.

"mathematical precision is not required and the Court will not attempt to be too technical or exacting in seeking to allocate costs.... Relevant factors include the relevant time devoted to evidence and submissions on the competing issues...and the relative success of the party in terms of its original claim."

Trade Practices Commission v Nicholas Enterprises Pty Limited

Cretazzo v Lombardi

"A successful party who has failed on certain issues may well not only be deprived of his own costs of those issues, but ordered in addition to pay his opponent's costs of them, and in this context "issue" does not mean a precise issue in the technical pleading sense, but any disputed question of fact or, in my view, of law."

· the time at which ABB informed Abigroup that it proposed to abandon much of its case; and

· the magnitude of its claims which it abandoned,

it is appropriate for the Court to depart what is described as the usual order as to costs.

At the time ABB commenced these proceedings on 6 August 1998, ABB only sought declarations that no formal contract had been entered into and that Abigroup pay ABB a reasonable price for work done and materials supplied. Indeed, as Mr Collins QC said in his opening address at T.55, originating summons "did not do much else".

On 27 September 1999 when ABB amended it pleadings, it substantially widened its claims against Abigroup. In essence, those additional claims are the very ones abandoned by ABB on day 151.

· the nature of ABB's case when it initiated these proceedings: when ABB commenced these proceedings on 6 August 1998, its claims were limited to a claim that there no contract had been entered into by ABB and Abigroup and that it was entitled to remuneration on a quantum meruit basis;

· the nature of ABB's case when it amended its pleadings on 27 September 1999: ABB significantly broadened its claims and allegations. Abigroup responded to these new claims and allegations only to be informed on Day 151 of the hearing before the Referee that ABB was no longer pursuing those claims; and

· the fact that ABB abandoned all of its claims except the claim which was truly its only case, namely that the parties never concluded a binding contract.

As set out in Mr Pudig's affidavit sworn 28 August 2003, Abigroup submits that approximately 50% of the party's time was spent during these proceedings addressing issues which were ultimately abandoned by ABB.

B The appropriate order for costs

Abigroup submits that the Court order that there be no order as to costs. Abigroup makes this submissions on the basis that the alternative bases submitted in the following paragraphs is unwieldy and would result in little practical benefit to anyone other than any cost consultants who may have to be engaged by the parties.

Alternatively, if the Court was not minded to make the above order, Abigroup submits that the Court order that Abigroup pay ABB 50% of ABB's costs incurred in the proceedings having regard to the fact that this is the assessment made as to the costs incurred by ABB in relation to issues abandoned by ABB. Abigroup relies on Mr Pudig's affidavit in support of that submission.

Abigroup submits that the Court order that ABB pay 50% of Abigroup's costs incurred in the proceedings on the same basis set out in paragraph 14 hereof.

Holding

24 The proper exercise of the Court's discretion is to order that the defendant's pay the plaintiffs costs of the Reference. Notwithstanding the care with which each of the parties framed its pleadings the essential issue, albeit arising from a number of causes of action generally put by each party in the alternative, concerned the legal rights which the parties had in relation to the work done and materials supplied by the plaintiff for the benefit of the defendant. The fact that the plaintiff ultimately did not pursue some of its alternative claims which as a leg of a cause of action put as one alternative, depended upon the Referee finding that the parties had entered into a contract, does not, provide a proper basis for departing from the general rule that costs should follow the event. There is no basis upon which it can be concluded that the plaintiff acted unreasonably in pleading the claims and maintaining them at the hearing. The short position is that the parties each reacted to the stances taken by the other in protective forensic mode where contraposed positions were of the type often encountered in situations where high uncertainty prevails as to the correct legal analysis (so very dependent on the facts).

25 I further accept as correct and adopt the following submissions by ABB:

· First, it was always open to the plaintiff to litigate a quantum meruit claim in the alternative to its damages claim for repudiation and to defer electing between the two remedies until the time for judgment. The course that the plaintiff adopted was no different in its effect.

· Second, evidence that was relevant to issues that the plaintiff ultimately did not pursue was also relevant to other issues that remained to be decided. For example, evidence of the contract value of the work was relevant to the reasonableness of the remuneration claimed on a quantum meruit and to the valuation of the defendant’s cross claim. Evidence relating to the progress of the works and the causes and extent of delay was relevant to the valuation of the plaintiff’s quantum meruit claim, the defendant’s Trade Practices Act case and to the valuation of the defendant’s cross claim.

· Third, some of the issues that were not pursued involved questions of argument only and had no bearing on the course of evidence or the length and cost of the hearing.

26 Each of those submissions were supported by carefully focused submissions which it seems to me are correct. Those submissions are as follows:

The plaintiff’s right to elect between inconsistent remedies

1. The plaintiff pleaded alternative claims for payment - quantum meruit if there was no contract and damages if there was a contract which the defendant had repudiated.

2. It was always open to the plaintiff to plead an entitlement to quantum meruit in the alternative to damages for repudiation and to litigate both claims in the alternative: Renard Constructions (ME) Pty Limited v Minister for Public Works (1992) 26 NSWLR 234 at 277E. Had the plaintiff done so, ultimately it would have been obliged to elect between remedies. The election could have been made at any time before judgment: Ciavarella v Balmer (1983) 153 CLR 438 at 449; United Australia Limited -v Barclays Bank Limited [1941] AC 1 at 29-30; Heckenberg v Delaforce (No. 2) [2000] NSWCA 254 per Mason P at [27].

3. The plaintiff could not have been criticised if it had litigated both claims in the alternative and elected, at some time before judgment, to accept payment on a quantum meruit basis in substitution for payment of damages. That fact alone would not have justified an adverse costs order. A fortiori in circumstances where evidence of the contract value of the work done (if there was a contract) is prima facie relevant to the reasonableness of the claimed remuneration, although not determinative of the question: Renard at 278A.

4. Although the plaintiff did not plead an alternative claim for a quantum meruit based on the defendant’s repudiation of the contract, in practical terms what happened in this case after the close of the evidence was no different than what would have occurred if the plaintiff had pleaded such an alternative case from the start.

5. In its written submissions in chief served on 26 October 2001 the plaintiff sought leave to amend the summons to substitute a quantum meruit claim for the claim for damages for repudiation. The application was made in the context of the plaintiff having pleaded and run a quantum meruit case, albeit on the basis that there was no contract. The plaintiff’s submissions to the Referee addressed the question of the availability of alternative remedies arising from the defendant’s repudiation and the plaintiff’s entitlement to elect between them. [See paragraphs 6-10 of Chapter 11 of the plaintiff’s submissions in chief to the Referee, which is Appendix L to the affidavit of Mr Harrowell sworn on 3 July 2003 in the adoption proceedings] If the claims had been pleaded in the alternative, the plaintiff’s submissions would have stood as the plaintiff’s election to pursue quantum meruit instead of damages. The background to the decision has been referred to earlier in paragraph 10 above.

6. The plaintiff confirmed its election in oral submissions to the Referee on 4 December 2001.

“The value of the work actually carried out by reference to the contract sum would be relevant. This has not been addressed by the parties in the evidence.”

8. The submission was wrong for reasons pointed out in the plaintiff’s reply submissions [See the plaintiff’s reply to the defendant’s submissions opposing the plaintiff’s amendment application, which are exhibited to the affidavit of Mr Harrowell sworn on 10 September 2003, particularly at paragraph 10. See also paragraph 94 of the plaintiff’s reply to Chapter 11 of the defendant’s submissions, which is included as Appendix N to Mr Harrowell’s affidavit sworn on 3 July 2003] because there was extensive, detailed evidence of the contract value of the work. The essential thrust of the defendant’s present submissions regarding the plaintiff’s ‘abandonment’ of its contract claims is that the cost of litigating issues raised by those claims was wasted. However, this is contradicted by the defendant’s submissions to the Referee as to the relevance of that evidence. Moreover, it is contradicted by the defendant’s submissions to the court on the adoption of the report, in which the defendant sought to rely on evidence of the contract value of the work done as a basis for demonstrating error in the Referee’s findings. [See the judgment of Einstein J in the adoption hearing, [2003] NSWSC 665 at page 148 [171] and page 158 (where paragraph 20 of the plaintiff’s submissions to the court are set out and adopted)]

9. The Referee was not required to rule in relation to the plaintiff’s application for leave to amend because he decided the primary issue, as to the existence of a contract, unfavourably to the defendant. When the application for leave to amend was made, it was anticipated that there would be oral submissions after the parties had completed their written submissions and that the question of leave would be argued and decided at that time. As things turned out, there were no oral submissions, so that the question of what should happen if the Referee refused leave did not arise. If leave had been refused it would have been necessary for the plaintiff to consider whether it wished to press its claim for damages. Nothing that the plaintiff said or did conveyed that if leave was refused the plaintiff would not proceed with its claims based on the defendant’s repudiation of the contract. The position was put squarely on the basis that the plaintiff was exercising an election that it contended had always been open to it, to chose between payment on a quantum meruit and damages.

Evidence of the contract value of work done was relevant to the valuation of the defendant’s cross claim

10. The defendant’s cross claim was for unspecified damages for breach of contract and for breaches of the Trade Practices Act. The claims were not particularised. Details of the claims were first provided in a report by the defendant’s expert, Mr Blunden. [A copy of Mr Blunden’s report is exhibited to the affidavit of Mr Harrowell sworn on 10 July 2003]. The claim was valued, at that stage, at $17.6 million. [Page 80 of the Blunden report] As appears from Mr Blunden’s report, the cross claim was valued by deducting from the defendant’s total direct costs to complete the roof works the sum that would have been payable to the plaintiff if it had completed the whole of the works [Blunden report, page 23, clause 3.1.1] and then adding consequential costs, prolongation costs and acceleration costs incurred as a result of delays which the defendant contended the plaintiff had caused.

11. As appears from the plaintiff’s submissions in reply to the defendant’s submissions on the quantum of its cross claim [A copy of the plaintiff’s reply submissions is exhibited to Mr Harrowell’s affidavit sworn on 10 October 2003] the valuation of Abigroup’s cross claim was the subject of an exchange of reports between Mr Blunden on behalf of the defendant and Mr Radcliffe on behalf of the plaintiff and also was dealt with in conclave. The final position of each of the experts is summarised at page 6 of the plaintiff’s submissions to the Referee. As a result of the work in conclave the defendant’s claim was reduced to $12.9 million. The plaintiff, through Mr Radcliffe, valued the claim at $1.33 million. Significant areas of disagreement included the value of the defendant’s claim for delay costs attributable to the plaintiff (which is referred to later in the submissions) and a difference of views as to the sum that would have been payable to the plaintiff if it had completed the whole of the works.

12. The plaintiff made it clear in written submissions delivered in January 2002 that it relied on the matters put forward by Mr Radcliffe in the joint report of the experts. [Paragraph 12 of ABB’s submissions on the quantum of the cross claim]The plaintiff also made detailed written submissions in relation to the contract value of the work at pages 115-146 of the submissions.

13. The submissions show that evidence of the contract value of ABB’s work remained at all times relevant to the valuation of the defendant’s cross claim.

Evidence of delay to the progress of the works and the reasons for it was relevant to the defendant’s Trade Practices Act claim and to the valuation of the plaintiff’s quantum meruit claim

14. The plaintiff made detailed submissions to the Court on this subject during the argument in relation to the adoption of the report. The plaintiff refers to and relies upon the judgment of Einstein J [[2003] NSWSC 665] at pages 156-157 [Specifically paragraphs 13-18 of the plaintiff’s submissions set out there] and pages 163-165. [Where paragraphs 28-35 of the plaintiff’s submissions are reproduced and adopted]

evidence of delays to the progress of works, the reasons for the delay and more generally, evidence relating to the circumstances of performance of the work, was relevant to the Trade Practices Act case

Evidence of delay to the progress of the works and the reasons for it was relevant to the valuation of the defendant’s cross claim

16. An essential step in the defendant’s proof of its cross claim was to show that ABB was responsible for 70% of the delays to the project. The extent and responsibility for delay was dealt with in reports and in conclave between the parties’ respective programming experts - Mr Hammond on behalf of the defendant and Mr Menyhart on behalf of the plaintiff. Mr Hammond’s conclusions were assumed by the defendant’s quantum expert, Mr Blunden, and formed the basis for his assessment of the value of the defendant’s cross claim. [See pages 24-27 of the plaintiff’s reply submissions to the Referee dealing with the quantum of the defendant’s cross claim, where the approach articulated by Mr Blunden is analysed]

17. Evidence going to the issue of the nature and extent of delay to the progress of the roof works and the reasons for it was directly relevant to the defendant’s proof of its cross claim .

18. The evidence was also relevant to the plaintiff’s extension of time claims. The plaintiff made clear to the Referee on 4 December 2001 that it did not require the Referee to decide any of its claims for extensions of time. This, however, did not relieve the defendant of the need to prove the matters upon which its cross claim depended. It could not be said, for example, that as a result of the plaintiff’s approach to its extension of time claims the defendant would be entitled to substitute a claim based on ABB being responsible for 100% of the delay that occurred, instead of 70% as stated in the evidence of Mr Hammond and Mr Blunden .

19. The plaintiff’s decision that it did not require the Referee to decide any of its extension of time claims did not make evidence going to the issue of delay irrelevant. It remained directly relevant to the cross claim .

20. Before the plaintiff notified its position in relation to the extension of time claims there had been significant developments in the evidence affecting the capacity of the defendant to prove its cross claim. As appears from the plaintiff’s submissions to the Referee, the plaintiff took the position that rulings on evidence rejecting key parts of Mr Hammond’s report and other evidence which had been assumed in the report, matters revealed during the cross examination of Mr Hammond in relation to his involvement in the preparation of the evidence and documentary evidence of admissions by the defendant as to the causes and extent of delay which had not been considered in Mr Hammond’s delay analysis, when taken together, meant that the defendant had failed to prove its case.

21. It could not be suggested that it was not open to the plaintiff to claim extensions of time or that it was unreasonable for the plaintiff to have maintained those claims in the proceedings. There is no basis for criticising the plaintiff for taking the view that, having regard to the course of evidence, it was no longer necessary for the plaintiff to establish a positive entitlement to extensions of time in order to defeat the defendant’s cross claim.

22. There is no principle that requires a party to litigate to finality every issue raised on the pleadings merely to preserve its position in relation to costs, if that party takes the view that having regard to the course of evidence it is no longer necessary to maintain all of its alternative claims .

A review of the issues not pursued

23. A review of the issues that the plaintiff did not pursue shows that evidence relevant to those issues was also relevant to other issues to which reference has been made earlier, or that the issues involved matters of argument which would have had no effect on the course of the evidence.

24. In the following paragraphs references are given to the schedule appended to the defendant’s amended notice of motion described as “Claims abandoned by the plaintiff”.

25. The matters in (a) and (b) concerning the terms of any contract between the parties, involved a question of argument only and did not involve any additional evidence. If the matters had been argued they would have been decided on the evidence going generally to the issue of whether there was a contract and, if so, on what terms. Moreover, the Referee made detailed findings that were relevant both to the Trade Practices Act allegations and to the contract case in relation to the plaintiff’s requirements to receive a complete, correct set of drawings that were approved and had no holds upon them and that such drawings would be made available to the plaintiff immediately.

26. The matters in (c), particularly each of the factual issues raised by the allegations in (i)-(xii), were decided by the Referee and were relevant generally to issues raised by the Trade Practices Act case and by the plaintiff’s quantum meruit claim. Because the issues were relevant generally to the circumstances of performance and to the causes of delay, evidence going to those issues was also relevant to the defendant’s cross claim for breach of contract.

27. The matters in (d) involved a question of argument only.

Evidence relevant to those issues was also relevant to the plaintiff’s quantum meruit claim, the Trade Practices Act claim and the defendant’s cross claim for breach of contract

“794 For the purposes of this part of the case, it is not necessary to analyse or make findings on each of the contested issues of fact raised by ABB’s extension of time claim. Nor is it necessary for the Referee to decide whether ABB had an entitlement to any extension of time and if so, what was that entitlement. The significance of the extension of time claim to the defendant’s allegation that the plaintiff was guilty of repudiation, lies in the fact that by submitting a detailed and substantially particularised claim ABB was plainly taking its stand on the contract, if there was one.

795 There can be no doubt whatsoever that the claim was a bona fide claim which ABB took very seriously. There is a large body of direct evidence comprising contemporaneous written communications between the parties as well as evidence in the proceedings from Hardy, McDonnell and Martin among others, that establishes the truth of many of the statements and factual assertions made in the claim. It was not a claim that could ever be dismissed out of hand as spurious or as a deliberate attempt to flaunt the contract. It gave the appearance of being and was in fact sanctioned by the contract applied according to its terms in circumstances where there was considerable doubt as to what those terms were if there was a contract at all

(a) a large body of evidence discloses that from the beginning, the plaintiff and the defendant were heavily engaged in vigorous and, at times, acrimonious discussion and disagreement concerning the adequacy of the design information provided by the defendant to the plaintiff, the nature of the ground conditions, the nature of access available to the plaintiff, the sequence and method of the work and the effect of all such matters upon actual and future progress of the works;

(b) that very early in the course of the works, there was a complete revision by the defendant of the structure which it wished to be built and this decision, accompanied with other circumstances, caused the actual commencement date to be delayed by eight weeks and yet the plaintiff’s application for an extension of time in respect of that decision by the defendant was made on 23 March 1998 and was initially refused and not finally granted until 24 July 1998;

(c) that for those and other reasons the plaintiff contended bona fide that it was entitled to an extension of time of 30 weeks and substantial additional costs;

(d) it made that extension of time claim on 31 August 1998;

(e) the defendant did not respond to that extension of time claim other than to say in its letter of 10 September 1998 that it would “review” the claim;

(f) the document upon which the defendant relies as evidencing the plaintiff’s repudiation of the assumed contract, on its face makes plain that the extended date of which the defendant complains was arrived at by a simple arithmetical addition of the time claimed in the extension of time claim to what would otherwise be the Date for Completion. In other words the alleged repudiatory document made plain that the precise matter with which the defendant complained, i.e. the new Date for Completion of the works as contended for in the program, had come into effect only because the plaintiff had added to what would otherwise be the Date for Completion the amount of time claimed in the extension of time claim. …;

(g) the extension of time claims still lay with the defendant and have not been administered in accordance with the contract;

(h) that remained the position as at 24 September 1998;

(i) the statement made by Mr Nightingale, which has been particularised as the second alleged repudiatory act, did not differ in any material respect from the first alleged act of repudiation particularised in paragraph 4 of the further amended cross claim. In particular, Mr Nightingale made it clear that whatever he was saying about the prospective Date for Completion also derived from, and depended completely upon, the addition of the time claimed in the extension of time claim to what would otherwise be the Date for Completion;

(j) that remained the position at the time the defendant purported to accept the alleged repudiatory conduct on 14 October 1998.

3. In those circumstances what must be examined is the question whether a mere assertion that, all other things being equal, performance would be late against a current due Date for Completion where there is a live and bona fide claim for an extension of time, which had not been determined by the defendant, bears the necessary repudiatory character to entitle the defendant to terminate ….”

30. The matter in (g) involved a question of argument only.

31. The matters in (h) and (i) related to the extension of time claims. The submissions made in relation to the matters raised by (e) and (f) apply equally here.

32. As to the matters in (j) the plaintiff led no evidence that it was induced to contract on the basis of the defendant’s representations. The issue that did remain live in the proceedings was whether the plaintiff’s representations in relation to its capacity were induced by the defendant’s representations concerning the existence and immediate availability of a complete, correct set of drawings that had no holds upon them. That question was a central issue in the resolution of the defendant’s Trade Practices Act case and was decided by the Referee adversely to the defendant.

33. The matter in (k) did not occupy any time at the hearing and was not the subject of any evidence.

34. The issue raised by the term of the contract referred to in (l) involved a matter of argument only and did not involve any additional evidence or wasted time at the hearing.

35. The issues concerning the delay in performance of the works referred to in (m) were relevant generally to the plaintiff’s quantum meruit claim, the Trade Practices Act claim and the defendant’s cross claim for breach of contract.

36. The issue of the cost consequences of delay suffered by the plaintiff referred to in (n) remained relevant both to the plaintiff’s quantum meruit claim and to the valuation of the defendant’s cross claim.

37. The issue concerning the term of the contract referred to in (o) involved a matter of argument only.

[emphasis added]

27 Mr Orlov on 12 September 2003 put the matters as follows:-

Can I now take up your Honour's invitation to crystallise how this is relevant. In the submissions that I made to your Honour on the adoption of the report and to which I gave your Honour references, I made good the proposition that issues relating to the course of work, delay, reasons for delay, design, the effect that had on the progress of work, and like issues, were relevant generally to the question of the quantification and the approach to quantification of the plaintiff's quantum meruit claim. Secondly, it was directly relevant to the question of liability on the Trade Practices Act case and, in particular, the defendant's contention that the lack of progress achieved by ABB as at 14 October 1998 when its involvement in the project was terminated indicated that ABB did not in fact have the capacity to perform the work within the time and by the means that it had represented. That case was an alternative case to the allegation that, to the extent that these were matters or representations as to the future, ABB did not have a reasonable basis for them. So the case was run on both bases.

But, so far as there was an allegation that ABB actually lacked capacity, the way the defendant set about proving the case was to say, "Look at what happened. The inference to be drawn from that is that eight months earlier when the representations were made, ABB did not in fact have the capacity to do the work in the way that it did." And that called into question an explanation, in essence, on a day-by-day basis as to what happened and why

Thirdly, the cross-claim - the allegations in paragraph 8 which put in issue a separate and alternate allegation that ABB had failed to regularly and diligently proceed with the works - put in issue the regularity with which, and the diligence with which ABB proceeded with the work from day one until the day that it ceased its involvement on the project .

28 These submissions are accepted as a correct summary of the position.

29 In the result it may be seen that although at first blush the proposition that the plaintiff having pleaded albeit in the alternative, certain particular matters and having elected to abandon them following the adducing of the evidence, should likely bear the costs of and occasioned in relation to the litigating of those matters, this is not a case in which that result should follow. The question of progress on the job was integrally tied to the balance of the cases pursued by both parties. The mere fact that one subset of the plaintiff’s evidence going to an assertion, if there had been a contract, of an entitlement to extensions of time under that contract, and that for example a programmer had given evidence to support this proposition, does not establish anything remotely like that for which the defendant contends presently.

30 Nor do I accept that the evidence given on affidavit by Mr Pudig on 28 August 2003 is conclusive and requires a finding that 49.7 percent of the time as referred to in his affidavit was spent in the proceedings in relation to issues abandoned by the plaintiff. The matter goes to weight. Mr Pudig is the solicitor for the defendant. He had the carriage of the matter from October 1998 until the present. He was permitted to express an opinion. This was that the defendant incurred great expense in having to consider and prepare evidence dealing with the additional claims and allegations made by the plaintiff in September 1999 and which additional claims and allegations the plaintiff ultimately abandoned in December 2001. He deposed as follows:

31 The Court proceeds upon all of the evidence before it. The opinion should likely be regarded as an opinion of a lay witness, there being no evidence that the Code of Conduct required to be signed by a person put forward as a section 79 expert with requisite specialised knowledge has been signed by Mr Pudig. His opinion is no doubt a subjective assessment based upon his familiarity with the proceedings but it cannot be regarded as overtaking the Court's role which is to determine the costs application on the basis of all of the evidence before the Court. The evidence of Mr Pudig flies in the face of the references to Mr Hammond’s evidence to be found in ABB’s submissions to the referee on the Cross Claim [at pages 335 to 368 of Tab ”S” to Mr Harrowell’s Affidavit 10 September 2003]. Mr Pudig’s evidence was inter alia to the effect that 100% of the time involved in the Tracey, Brunstrom and Hammond report on delays related to issues abandoned. This must be incorrect and reflects adversely upon the reliability of Mr Pudig’s evidence.

32 The proper exercise of the course discretion is to make an order that costs follow the event.

33 In relation to the Abigroup application for judgment on matters abandoned by ABB and for costs in relation to those matters the proper exercise of the Court’s discretion is to dismiss that application. And for the following reasons:

· The decision in relation to costs of the proceedings appropriately takes into account the whole landscape comprising the course of the proceedings, only one parameter of which includes matters abandoned by ABB.

· There is no utility as it seems to me in the Court at this stage, following the conclusion of the Reference and following the handing down of the reserved judgment on the adoption on 30 July 2003, now revisiting the manner in which the matter was treated by the parties and the Referee during the reference. There is no doubt but that the principles in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 at 602 - 603 would be applicable to raise an estoppel where either of the parties to the proceedings might endeavour in other proceedings were to re-litigate a relevant issue litigated in those present proceedings.

34 The costs decision would be no different even had judgment been entered for Abigroup in relation to the abandoned claims. And that for reasons already given where it is simply inappropriate and in fact impossible for the Court in tunnel vision manner, to deal separately with the issues not ultimately pursued by the plaintiff. It is simply not possible to sever and quantify the extent, if any, to which issues ultimately abandoned could be said to have had a bearing on the course of the evidence or the length and cost of the hearing. The issues were simply to interwoven to make this exercise one which is appropriate. The fact is that the plaintiff succeeded and the defendant failed and the usual order as the costs must follow. As was put in Cretazzo v Lombardi supra:

The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case.

35 It cannot be said that a two-year reference occurs daily but the approach taken by Jacobs J in the passage is entirely proper and apt in this monumental current litigation.

36 Part 40 Rule 1 uses the words “the Court may at any stage of the proceedings give such judgment or make such orders as the nature of the case requires.”

37 In my view the proper exercise of the Courts discretion is not to order that judgment be given for the defendants on the issues abandoned.

Short Minutes

38 The plaintiff is to bring in short minutes.

I certify that paragraphs 1 - 38
are a true copy of the reasons
for judgment herein of
the Hon. Justice Einstein
given on Wednesday
24 September 2003

Susan Piggott

Associate

Last Modified: 09/26/2003

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Citations

ABB Engineering Construction Pty Limited v Abigroup Contractors Pty Limited [2003] NSWSC 867

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Statutory Material Cited

2

Haines v Bendall [1991] HCA 15

Council of the City of Sydney v Woodward [2000] NSWCA 201

CITATION:	ABB Engineering Construction Pty Limited v Abigroup Contractors Pty Limited [2003] NSWSC 867
HEARING DATE(S):	12/09/03, 16/09/03 (further submissions)
JUDGMENT DATE:	24 September 2003
JURISDICTION:	Equity Division Technology and Construction List
JUDGMENT OF:	Einstein J
DECISION:	Short minutes to be brought in.
CATCHWORDS:	Principles - Interest - Costs - Judgment for causes of action abandoned
LEGISLATION CITED:	Supreme Court Act Supreme Court Rules
CASES CITED:	Abigroup v Peninsula (No 2) [2001] NSWSC 1016 Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 Australian Trade Commission v Disktravel [2000] FCA 62 Bennett v Jones [1977] 2 NSWLR 355 BP Exploration Co (Libya) Ltd v Hunt (No 2) [1983] 2 AC 352 Ciavarella v Balmer (1983) 153 CLR 438 Council of the City of Sydney v Woodward [2000] NSWCA 201 Cretazzo v Lombardi (1975) 13 SASR 4 Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2002] FCA 282 Falkner v Bourke (1990) 19 NSWLR 574 Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 Heckenberg v Delaforce (No. 2) [2000] NSWCA 254 HomeOwners Insurance Pty Ltd v Job (1983) 2 ANZ Ins Cas 60-535 Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748 LMI v Baulderstone (No.2) [2002] NSWSC 72 Madden as Official Liquidator of Aquanaut Constructions Pty Ltd (in liq) [2001] NSWSC 1051 Mobile Innovations Ltd v Vodafone Pacific Ltd [2003] NSWSC 423 NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) Inc (No 2) [2002] FCA 967 Oshlack v Richmond River Council (1998) 193 CLR 72 Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 Renard Constructions (ME) Pty Limited v Minister for Public Works (1992) 26 NSWLR 234 Smeaton Hanscomb & Co Ltd v Sassoon I Setty Son & Co (No 2) [1953] 1 WLR 1481 Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 28 ALR 201 United Australia Limited v Barclays Bank Limited [1941] AC 1 Waters v PC Henderson (Aust) Pty Ltd ( Kirby P, Mahoney and Priestley JJA, New South Wales Court of Appeal, 6 July 1994, unreported)
PARTIES :	ABB Engineering Construction Pty Limited (Plaintiffs) Abigroup Contractors Pty Limited (Defendant)
FILE NUMBER(S):	SC 55033/98
COUNSEL:	Mr M Orlov (Plaintiff) Mr F Corsaro SC (Defendant)
SOLICITORS:	Abbott Tout (Plaintiff) Clayton Utz (Defendant)