Archonstruct P/L v Karalis (No 2)

Archonstruct P/L and Mr Carne, in his capacity as a director, sued the defendants in relation to building works. The defendants counterclaimed against Mr Carne in his capacity as a director and the Architect, who was also a defendant. The plaintiff sought damages for breach of contract and the defendants counterclaimed for damages for breach of contract and for professional negligence. The court had to decide whether the defendants’ counterclaim against Mr Carne as a director and the Architect was valid, and if so, whether it should be dismissed. The court also had to decide on the quantum of damages to be awarded to the plaintiff and the Architect, and the allocation of costs between the parties.

The court held that the defendants’ counterclaim against Mr Carne in his capacity as a director and the Architect was unjustified and dismissed it. The court found that the defendants did not have a valid reason for joining Mr Carne in their counterclaim, and rejected the argument that the counterclaim was motivated by an intention to cause financial harm to Mr Carne. The court also found that the plaintiff was entitled to damages for breach of contract and ordered the defendants to pay the plaintiff an interim amount of $80,675.00. The court deferred the determination of the quantum of damages to be awarded to the plaintiff and the Architect, as well as the award of the arbitrator appointed pursuant to s33 of the District Court Act, until the outstanding issues between the parties were resolved. The court also deferred the allocation of costs between the parties until those issues were determined.

The court ordered the defendants to pay the costs of the plaintiff and the Architect as between party and party, and to pay two thirds of the plaintiff’s costs of the proceedings between them. The court also referred the question of which party, if either, should bear the costs of the abandoned arbitration proceedings to a Master for hearing and decision.

The court's final orders were that the defendants’ counterclaim against Mr Carne and the Architect was dismissed with an order that their respective costs of and incidental to the counterclaim as between party and party, be paid by the defendants to be taxed if not agreed. The court ordered the defendants to pay the plaintiff $80,675.00 on account of the plaintiff’s entitlement to judgment upon its claim, and deferred the determination of the quantum of damages to be awarded to the plaintiff and the Architect until the outstanding issues between the parties were resolved. The court also deferred the allocation of costs between the parties until those issues were determined.