Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd

[2023] ACTSC 399

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 8) 

Citation: 

[2023] ACTSC 399

Hearing Date: 

On the papers

Decision Date: 

18 December 2023

Before:

McCallum CJ

Decision: 

The costs of the plaintiff’s application dated 4 January 2022 and the defendant’s applications dated 16 August 2023 and 22 August 2023 are to be costs in the cause.

Catchwords: 

COSTS – INTERLOCUTORY APPLICATIONS – Where each party brought an interlocutory application concerning a fund held by the defendant in accordance with the provisions of the Building and Construction Industry (Security of Payment) Act – where final rights under the building contract remain to be determined – whether costs should follow the event – whether costs should be determined in accordance with “usual rule” in the case of interlocutory injunctions

Legislation Cited: 

Building and Construction Industry (Security of Payment) Act 2009 (ACT)

Court Procedures Rules 2005 (ACT) r 6906

Cases Cited: 

Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 7) [2023] ACTSC 292

Boscolo v TCN Channel Nine Pty Limited (No 2) (unreported, Supreme Court of New South Wales, Eq Div, Young J 28 April 1994)

His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand & Anor v The Macedonian Orthodox Community Church St Petka Incorporated & Anor (No 2) [2007] NSWCA 142

International Computer Network v Lumos International Pty Ltd [2018] NSWSC 1793

Parties: 

Beno Excavations Pty Ltd t/as Benex Pipelines ( Plaintiff)

Harlech Enterprises Pty Ltd atf Harlech Family Trust ( First Defendant)

Jonathon H Sive (Second Defendant)

Representation: 

Counsel

D Robens ( Plaintiff)

A J Greinke ( First Defendant)

Solicitors

Tallarita Joseph Lawyers ( Plaintiff)

Mills Oakley ( First Defendant)

File Number:

SC 206 of 2021

McCALLUM CJ:

1․On 17 October 2023, I granted an application by Harlech Enterprises Pty Ltd to have orders previously made by Elkaim J set aside: Beno Excavations Pty Ltd v Harlech Enterprises Pty Ltd (No 7) [2023] ACTSC 292 (Beno (No 7)).  The orders I intended to set aside were an order made “by way of restitution” (order ii) and an order for interest on the fund in question (order iii).  I inadvertently also included reference in my order to an order for costs made by his Honour (order iv).  I did not intend to set the costs order aside at that time.  As indicated in my judgment at [7], I proposed to hear from the parties as to whether that order should also be set aside.  Subject to what follows, it would be appropriate to correct that mistake, as allowed under r 6906 of the Court Procedures Rules 2005 (ACT). 

2․I granted leave to the parties to provide short written submissions on the appropriate fate of the costs order made by Elkaim J and as to the costs of the two applications determined by me, being applications dated 16 August 2023 and 22 August 2023.  The application dated 16 August 2023 was the application to have the restitution order set aside.  The application dated 22 August sought an interim stay of the enforcement of the restitution order pending the determination of the application to have it set aside. 

3․The parties were content to have the costs of those applications determined on the papers.  This judgment determines those issues.

4․My earlier judgment sets out the history of the proceedings and provides the context for this judgment.  In short summary, the proceedings concern the operation of the Building and Construction Industry (Security of Payment) Act 2009 (ACT). That Act has been described as a “pay now, argue later” scheme which secures payments to contractors under building contracts without deciding final rights, instead preserving them for later resolution. Harlech obtained a determination under the Act requiring Beno to make a payment to it. That determination was later set aside, but not before Harlech had registered it as a judgment and garnisheed part of the judgment debt. Although the determination was set aside, the judgment was not. Meanwhile, the parties’ final rights under the building contract have still not been determined. The present proceedings concern the fate of the garnisheed sum. In accordance with the scheme created by the Act, that sum was always held by Harlech subject to the determination of any ultimate liability Beno may have to Harlech. If there is no such liability, it will have to be returned.

5․Elkaim J ordered Harlech to repay the garnisheed sum to Beno by way of restitution.  That is the order I set aside.

6․Harlech submitted that, having ultimately been successful in all three applications, costs should follow the event.  Noting that the costs order made by Elkaim J has already been set aside (albeit inadvertently), Harlech sought an order instead that Beno pay Harlech’s costs of the application determined by Elkaim J and of Harlech’s applications dated 16 and 22 August 2023.

7․Beno submitted that it should retain the benefit of the costs order made by Elkaim J and that my order of 17 October 2023 should be corrected accordingly.  As to the costs of Harlech’s two successful applications determined by me, Beno submitted that the costs of those applications should be determined in accordance with the “usual rule” that applies in cases where an interlocutory injunction is granted, namely, that those costs should be costs in the cause.

8․I have concluded that the costs order made by Elkaim J should be set aside and that the costs of all three applications should be costs in the cause.  As the final rights of the parties are now to be determined in the Federal Court, the appropriate order is to grant liberty to the parties to approach the Court after the conclusion or resolution of those proceedings.  My reasons for those conclusions are as follows.

The costs order made by Elkaim J

9․As to the costs order made by Elkaim J, Harlech’s position was based on its success in having the restitution order set aside.  Harlech submitted that costs should follow that event, meaning that his Honour’s costs order would be set aside and there would instead be an order that Beno pay Harlech’s costs of the application. 

10․Harlech noted that, while the basis for its application to have the restitution order set aside was that there had been a relevant change of circumstances (being the commencement of proceedings in the Federal Court to determine the underlying dispute), the basis on which I granted the application was that I was not satisfied there was any basis for ordering restitution in the circumstances: Beno (No 7) at [42]. Harlech accordingly submitted that Elkaim J’s decision was wrong in principle and should not have been made even in the circumstances at the time. On that basis, Harlech submitted that, in setting aside his Honour’s orders, I was engaging in “a quasi-appeal”. Harlech submitted that the correct decision in the application before Elkaim J would have been to dismiss Beno’s application and that costs would then have followed that event.

11․That analysis is complicated by the consideration that, although in principle the underlying dispute remained unresolved at the time Elkaim J heard the application, there was then no proceeding in which that might occur.  Beno accordingly submitted that there was no reason at that time for Harlech to withhold the secured funds.  Harlech had not at that time taken the step it has now taken of commencing proceedings in the Federal Court to determine the underlying dispute.  Beno noted in that context that Harlech did not appeal from Elkaim J’s decision.

12․Beno further submitted that Elkaim J’s determination that the fund held should be released even though the underlying liability remained to be determined has not been shown to be in error.  For the reasons explained in Beno (No 7), I am not persuaded that there was a basis for ordering restitution at that time, particularly when the judgment debt remained in force.  Conversely, however, it is significant that Harlech had taken no step at that stage to have the underlying dispute determined.  It is also significant that there was no appeal from that order.  Harlech allowed the order to stand, and yet did not comply with it.  Harlech moved to have the order set aside only after it had exhausted its rights of appeal in relation to the determination and then commenced separate proceedings a considerable time later to determine the underlying dispute. 

13․More importantly, had Elkaim J dismissed the application, it is not obvious that costs should have followed that event.  According to my analysis of the legislation (explained in Beno (No 7)), the reason for dismissing the application would have been that there was no basis for ordering restitution so long as the underlying liability remained to be determined.  That is still the case; the underlying liability has still not been determined.  The more appropriate order would have been that the costs of the application be costs in the cause.

14․Indeed, that is the order sought by Beno in respect of the two applications determined by me.  For the reasons explained below, I consider that is the appropriate order concerning those applications.  In my view, the outcome should be the same for the costs of the application before Elkaim J.  All three applications were interlocutory applications concerning the fate of the security fund at a time when the parties’ final rights remain to be determined.  The costs of all three applications should be costs in the cause.

The costs of the further applications

15․Harlech submitted that it should have its costs of the two applications determined by me.  As already noted, the first was the application dated 16 August 2023 seeking to have Elkaim J’s order set aside.  The second was an application dated 22 August 2023 seeking to stay the enforcement of the restitution order pending determination of the application to have that order set aside. 

16․Harlech was successful in both applications.  However, as submitted by Beno, Harlech’s success in each case may be likened to success in obtaining an interlocutory injunction.

17․Beno relied in that context on the decision of Ward CJ in Eq in International Computer Network v Lumos International Pty Ltd [2018] NSWSC 1793 at [94]. Upon analysis, as indicated at [95]-[96], her Honour’s determination of costs in that case was an application of a principle stated by the NSW Court of Appeal. The appellate decision is the authority to which reference should be made. The decision was His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand & Anor v The Macedonian Orthodox Community Church St Petka Incorporated & Anor (No 2) [2007] NSWCA 142.

18․The Court of Appeal (Beazley, Giles and Hodgson JJA) referred at [20] to Young J’s statement in Boscolo v TCN Channel Nine Pty Limited (No 2) (unreported, Supreme Court of New South Wales, Eq Div, Young J, 28 April 1994) that “[a]lthough costs are always in the discretion of the court, the usual rule that is applied in the exercise of the court’s discretion is that if a person succeeds in getting an interlocutory injunction costs should be costs in the cause …”

19․In relation to that “usual rule”, the Court of Appeal said at [21]:

His Honour did not explain the basis of the rule. That is not of itself unexpected, as practices grow up within particular jurisdictions which routinely deal with a particular type of application. The rationale for making an order that costs be costs in the cause is that, at the stage of granting an interlocutory injunction, the court is not in a position to adjudicate on the ultimate outcome of the proceedings. Rather, provided there is a reasonable case to be tried, the Court’s focus in deciding whether to grant the application for interlocutory relief is on other considerations and, in particular, on determining whether, on the balance of convenience, an injunction ought to be granted. Accordingly, if a plaintiff who applies for an interlocutory injunction is not ultimately successful in the proceedings, that plaintiff should not receive the costs of the application for an injunction which, when the matter is considered in overview cannot be sustained. However, as already explained, each case must depend upon its own facts.

20․Beno submitted that, in the present case, the Court is not in a position to adjudicate on the ultimate outcome of the proceedings and accordingly that the costs of Harlech’s two applications should be costs in the cause.  I agree.

21․I should note a separate submission made by Harlech as to the costs of the application dated 22 August 2023 by which Harlech sought interim relief pending the determination of its application dated 16 August 2023 to have the restitution order set aside.  Harlech relied on the fact that it had sought Beno’s consent to an interim stay of the enforcement of the restitution order (and warned Beno of the costs implications of withholding consent).  Harlech submitted that Beno could have consented to that interim relief but instead contended that there was no issue to be tried.

22․I do not think that is sufficient reason to order Beno to pay Harlech’s costs of the interim application.  As already noted, Harlech was under an order of the Court, with which it had not complied.  It was not until Beno took enforcement action that Harlech moved for the order to have Elkaim J’s order set aside.  Beno’s response to the application for interim relief must be viewed in that context.  After all the time Harlech had taken to bring its application, Beno should not have been expected to respond within the urgent timeframe imposed on it by Harlech.

Orders

23․In light of the conclusion I have reached, although the costs order made by Elkaim J was set aside by me inadvertently, there is now no need to make an order correcting my earlier order.

24․For those reasons, I make the following orders:

(1)The costs of the plaintiff’s application dated 4 January 2022 and the defendant’s applications dated 16 August 2023 and 22 August 2023 are to be costs in the cause.

(2)Grant liberty to the parties to make any further application for costs following the determination or resolution of the Federal Court proceedings ACD 1 of 2023.

(3)Direct the parties to inform the Registrar within 14 days after the determination or resolution of the proceedings in the Federal Court in the event that no further application is to be made.

I certify that the preceding twenty-four [24] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice McCallum

Associate:

Date: 18 December 2023