Aquatec-Maxcon Pty Ltd v Barwon Region Water Authority (No 9)

[2007] VSC 531

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IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

BUILDING CASES LIST

No. 7091 of 2000

AQUATEC-MAXCON PTY LTD (ACN 002 250 482)	Plaintiff
v
BARWON REGION WATER AUTHORITY and OTHERS	Defendants

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JUDGE:	BYRNE J
WHERE HELD:	Melbourne
DATE OF HEARING:	23 August and 24 September 2007
DATE OF JUDGMENT:	14  December 2007
CASE MAY BE CITED AS:	Aquatec-Maxcon Pty Ltd v Barwon Region Water Authority (No. 9)
MEDIUM NEUTRAL CITATION:	[2007] VSC 531

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Practice and Procedure – costs of apportionment proceedings.

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APPEARANCES:	Counsel	Solicitors
For Aquatec-Maxcon Pty Ltd (Aquatec)	Mr R J Manly SC and Mr Bernard Carr	Gadens Lawyers
For Barwon Region Water Authority (Barwon)	Mr Peter H Clarke	Harwood Andrews
For Nacap Pty Ltd  (Minson Nacap)	Mr T J Margetts SC and Ms S Kirton	Moray & Agnew
For MWH Pty Ltd  (Montgomery Watson)	Mr D S Levin QC and Mr I H Percy	Monahan + Rowell

For Wynton Stone Australia
Pty Ltd (Wynton Stone) and Mr Sloggett Mr David J O’Callaghan SC Deacons

For JJP Geotechnical Engineering Pty Ltd (Barrett Fuller)	Mr John R Dixon SC	Phillips Fox
For Taylor Thomson Whitting Pty Ltd (TTW)	Ms L Chan	Minter Ellison

HIS HONOUR:

1. On 23 August 2007 and 24 September 2007, I heard argument about the orders for costs which are to be made in this proceeding.  On 5 October 2007, I published my reasons for the conclusions which I reached on the matters there raised[1] and concluded by proposing a series of orders which I considered appropriate to give effect to those conclusions. 

   [1]Aquatec-Maxcon Pty Ltd v Barwon Region Water Authority (No. 8) [2007] VSC 363.

1. TTW and Barrett Fuller have now drawn my attention to two matters which were the subject of argument but which were said not to have been dealt with in my reasons or in the proposed orders.  I agreed to receive written submissions upon these matters and the parties agreed that I should deal with them on the basis of those submissions and those had been presented previously.

1. I accept that, in each case, the orders sought were not dealt with in my reasons so that it is appropriate that I now deal with them.

TTW Order against Wynton Stone and Sloggett

1. Pursuant to the 1997 deed of novation under which Wynton Stone and Mr Sloggett transferred the Wynton Stone contracts to TTW, including the Barwon Water project, Wynton Stone and Mr Sloggett indemnified TTW “from any claims, damages, costs or expenses… incurred by TTW… resulting from a breach of the warranties contained in cl. 1 and/or a claim made by any of the clients in respect of the WIP performed by Wynton Stone prior to the completion date”. 

1. In this proceeding Montgomery Watson successfully sued TTW for matters which I found to be breaches of warranties and, accordingly, on 4 May 2007,[2] I made leap frog orders to the effect that Montgomery Watson should look to Wynton Stone and Mr Sloggett directly for its costs.

   [2]Aquatec-Maxcon Pty Ltd v Barwon Region Water Authority (No. 6) [2007] VSC 127.

1. In this proceeding, apportionment and contribution claims were made by TTW against Aquatec, Minson Nacap, Montgomery Watson and Barrett Fuller.  These claims were unsuccessful and, accordingly, in my judgment of 5 October 2007, I proposed that TTW should pay the costs of those claims to those parties.  TTW now seeks leap frog orders in respect of those costs other than those of Montgomery Watson so that they, too, would be passed directly to Wynton Stone and Mr Sloggett. 

1. It is put in support of this contention that the indemnity which I have set out above extends to those claims.  The indemnity was given in respect of two types of claims:  first, “any claim, damages, costs or expenses… incurred by TTW resulting from a breach of the warranties”;  and second, a claim made by or on behalf of the clients of Wynton Stone in respect of work in progress.  The client in question here is none of the parties above against whom TTW sought contribution or apportionment.  The second limb of the indemnity, therefore, has no application. 

1. The first limb requires that there be made a claim against TTW.  The costs, the subject of the present application, are those associated with claims, not brought against TTW, but claims brought by TTW.  The legal costs, however, might be said to have resulted from the breach by Wynton Stone of the warranties claimed in the deed of novation because they were incurred by TTW in its unsuccessful attempt to dilute its responsibility for that breach.  But, even so, they were one step removed from the claims made by Montgomery Watson. 

1. In all the circumstances, the nexus between the costs now in question and the right of indemnity is not sufficient to warrant the making of a leap frog order.  The order which I will make is that TTW recover from Wynton Stone and Mr Sloggett a sum equal to any amount of costs it pays to Aquatec, Minson Nacap and Barrett Fuller for its unsuccessful claims for contribution and apportionment against them. 

Barrett Fuller’s Orders against Witness Statement

1. In paragraph 7 of the order proposed on 5 October, I provided that the costs of Barrett Fuller of any claim for contribution or apportionment brought against it by Aquatec, Minson Nacap, Montgomery Watson or TTW be paid by the claimant concerned.  I overlooked the fact that Wynton Stone had also unsuccessfully sought apportionment against Barrett Fuller.  It follows from what I have said on that occasion that Barrett Fuller should have its costs of the unsuccessful claim brought by Wynton Stone against it.  With respect to the orders for costs of the unsuccessful apportionment claims, I limited the amount of those costs to the costs of pleadings on the basis that I estimated that, in terms of trial time and other interlocutory proceedings, these claims made no significant contribution to the overall costs of the proceeding.

1. Counsel for Barrett Fuller contends that such an order in the case of the apportionment claims against his client would not do justice to its position.  It is necessary to understand that no party sought substantial relief against Barrett Fuller.  Barrett Fuller was, as I found, retained by Wynton Stone to carry out geotechnical work for the purposes of the design of the tanks and its work attracted much criticism at the trial.  The structure of this litigation was that each of the parties down to Wynton Stone sued the party down the line with which it had a contract.[3]  A curious feature of the plea by Wynton Stone against Barrett Fuller was that it alleged that Barrett Fuller was in breach of its contractual and tortious duties owed to Wynton Stone but Wynton Stone did not seek damages or other relief for this breach.  The allegation was relied upon only as a basis for a claim that any liability of Wynton Stone to another party should be apportioned with Barrett Fuller.[4]

   [3]See Aquatec-Maxcon Pty Ltd v Barwon Region Water Authority (No. 8) [2007] VSC 263 at [1].

   [4]See Aquatec-Maxcon Pty Ltd v Barwon Region Water Authority (No. 7) [2007] VSC 213 at [10]-[13].

1. The consequence of this was that Barrett Fuller was not at risk of a money judgment in favour of any party.  It was nonetheless a defendant to the claim of Montgomery Watson and others because this was required by the apportionment provisions of the Building Act 1993. But, if it had been found to be liable to any party, this would have served only to dilute the liability of the co-defendant to that party. Nevertheless, as a party to the proceeding and as a party against which serious allegations of breach of professional duty were made, it participated actively in the trial, as it was entitled, and it successfully resisted the claims made against it. In the case of each of the other parties against which apportionment was sought, there was a party which made a money claim against it and, in each case, that claim was successful. In such a case, the burden of the costs falls principally upon the party against which the successful money claim was brought. In the case of Barrett Fuller, such a claim, if brought by Wynton Stone would also have been successful since I have found that its work was deficient and in breach of its contract with Wynton Stone. But the claim was not brought.

1. The apportionment claims brought against Barrett Fuller raise an issue between the claimants in each case and Barrett Fuller.[5]  It is, therefore, entitled to its costs of that issue against those claimants on the principle that costs follow the event.  Counsel for Barrett Fuller sought such an order against each of these claimants.  It might be thought that the suggested order means that the parties seeking only apportionment would be required to bear a burden out of all proportion to the seriousness of the issue which they raised. This is particularly the case where their other unsuccessful apportionment claims were visited with less severe costs orders.  To my mind it behoves a defendant who is contemplating seeking any relief to bear in mind that the decision carries with it serious consequences, not only for the party against which the relief is sought, but also for itself.  Barrett Fuller, by the decision of those parties who sought apportionment against it, was put to considerable trouble and expense for which it, as successful party, should be compensated.  I will make the order sought.

   [5]Boral Resources (Vic) Pty Ltd v Robak Engineering & Construction Pty Ltd [1999] 2 VR 507

1. For reasons which I have expressed, these costs, insofar as they fall upon TTW, are covered by the indemnity given by Wynton Stone and Mr Sloggett and will be covered by the order which I have proposed.  Under this order the amount of costs paid by TTW to Barrett Fuller will be paid to TTW by Wynton Stone and Mr Sloggett.

Conclusions

1. I will therefore modify the orders which I proposed on 5 October as follows:

1.        Insert a new paragraph 7:

The costs of Barrett Fuller of the proceeding including reserved costs be paid by Aquatec, Minson Nacap, Montgomery Watson, Wynton Stone and TTW.

2.        Insert a new paragraph 9:

The amount of costs ordered in paragraphs 3-6 and 8 be limited to the costs of pleadings between the applicant for contribution or apportionment and the respondent respectively.

3.        Insert a new paragraph 12:

In the event that TTW pay costs to Aquatec, Minson Nacap, Montgomery Watson and Barrett Fuller in accordance with the orders made in paragraphs 3-8 hereof an amount equal to those costs be paid to TTW by Wynton Stone and Mr Sloggett.

4.        Renumber order 12 as order 13.

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