Building Corporation WA Pty Ltd v Marshall [No 3]

[2022] WASC 254

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   BUILDING CORPORATION WA PTY LTD -v- MARSHALL [No 3] [2022] WASC 254

CORAM:   TOTTLE J

HEARD:   20 JUNE 2022

DELIVERED          :   8 AUGUST 2022

FILE NO/S:   CIV 2186 of 2020

BETWEEN:   BUILDING CORPORATION WA PTY LTD

Plaintiff

AND

ARTHUR PATRICK MARSHALL

JEANETTE ELLEN MARSHALL

First Defendants

MARK FREDERICK RIETVELD

Second Defendant

RIETVELD ARCHITECTS PTY LTD

Third Defendant

MERCEDES GROUP PTY LTD

Fourth Defendant

ILIADIS & ASSOCIATES PTY LTD

Third Party

Catchwords:

Practice and procedure - Costs - Application and trial of preliminary issue - Application to amend further amended statement of claim filed on the eve of trial

Legislation:

N/A

Result:

The first defendants pay the plaintiff's costs of the determination and hearing of the preliminary issue save for: any costs incurred in connection with preparing and adducing evidence from Mr Craig Melville Smith; and, an allowance in respect of the time spent on 13 December 2021 hearing the plaintiff's application for leave to amend its further amended statement of claim, to be taxed

The plaintiff pay the first defendants' costs of the application for the hearing of the preliminary issue to be taxed

There be no order as to costs in respect of the plaintiff's application to amend the further amended statement of claim on 10 December 2021

Category:    B

Representation:

Counsel:

Plaintiff	:	M C Hotchkin
First Defendants	:	A Rumble
Second Defendant	:	C Maclean
Third Defendant	:	C Maclean
Fourth Defendant	:	M Lang
Third Party	:	JPT Hart

Solicitors:

Plaintiff	:	Hotchkin Hanly
First Defendants	:	Bennett + Co
Second Defendant	:	DLA Piper Australia - Perth
Third Defendant	:	DLA Piper Australia - Perth
Fourth Defendant	:	Jackson McDonald
Third Party	:	Barry Nilsson Lawyers

Cases referred to in decision:

Building Corporation WA Pty Ltd v Marshall [2021] WASC 242

Building Corporation WA Pty Ltd v Marshall [No 2] [2022] WASC 140

Floruit Holdings Pty Ltd v Sebastian - Builders & Developers Pty Ltd [2009] NSWCA 411

Noyce v Jeromel (No 2) [2021] SASCA 111

Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388

TOTTLE J:

Introduction

1. These reasons concern competing applications for costs arising out of the determination of a preliminary issue in this action. These reasons assume familiarity with the reasons for determining the preliminary issue,[1] and with the reasons for ordering the issue be tried as a preliminary issue.[2]

   [1] Building Corporation WA Pty Ltd v Marshall [No 2] [2022] WASC 140.

   [2] Building Corporation WA Pty Ltd v Marshall [2021] WASC 242.

2. The plaintiff applies for orders that the first defendants pay its costs of the determination of the preliminary issue.  It contends that the costs of the application for determination of the preliminary issue, which were reserved, be costs in the cause.  The plaintiff contends there should be no order as to costs in respect of an application to amend the further amended statement of claim made on the eve of the trial and determined on the first morning of the trial.

3. The first defendants' primary position is that all the costs should be reserved until the conclusion of the action.  Their alternative position is as follows:

   1The Plaintiff pay the First Defendants' reserved costs of the application for a separate trial of preliminary issues heard 20 July 2021, to be assessed, if not agreed.

   2The First Defendants pay 60 per cent of the Plaintiff's costs of the trial of preliminary issues heard on 13 and 14 December 2021, to be assessed, if not agreed.

   3The parties bear their own costs of the Court's determination of the costs following the trial of the preliminary issues. 

4. It is unnecessary to recite the contentions advanced by the parties in support of their respective positions nor is it necessary to recite the basic principles governing the discretion to award costs.  These are set out in Strzelecki Holdings Pty Ltd v Jorgensen.[3]

   [3] Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388 [49] - [52] (Murphy, Mitchell & Pritchard JJA).

Costs of the determination of the preliminary issue

1. The preliminary issue was whether, assuming the existence of copyright in the Design Concept Plan, the plaintiff had granted the first defendants an implied licence to use the plan to build a home substantially in accordance with it. 

2. It was a discrete issue which the first defendants urged the court to hear on a preliminary basis and on which the plaintiff succeeded. 

3. The exercise of the discretion to award costs is heavily dependent on the facts of the case and while there may be cases in which it is appropriate to reserve the costs of determining a preliminary issue 'as a matter of principle and authority, costs of a separate issue should ordinarily not be reserved but determined at the time of determination of the preliminary issue'.[4]

   [4] Noyce v Jeromel (No 2) [2021] SASCA 111 [6] (Kelly P, Livesey JA & Blue J) citing Floruit Holdings Pty Ltd v Sebastian - Builders & Developers Pty Ltd [2009] NSWCA 411 [7] (Bergin CJ in Eq), [1] (Allsop P), [2] (Young JA).

4. In my judgment the plaintiff is entitled to an order for costs in its favour.  There are two qualifications. First, the plaintiff adduced expert evidence from an architect, Mr Craig Melville Smith, and sought to rely on that evidence for the purposes of construing the agreement between it and the first defendants.  I held Mr Smith's evidence was not admissible for that purpose.[5]  The plaintiff is not entitled to any costs in respect of adducing evidence from Mr Smith.  Second, for the reasons given below, there should be no order as to costs in respect of the plaintiff's late application to amend its further amended statement of claim.  Because the application was argued on the first morning of the hearing, this will necessitate a reduction in the costs of the hearing to which the plaintiff would otherwise be entitled.  The transcript indicates that the first 90 minutes of the hearing were concerned with the application to amend.  Subject to those qualifications, the first defendants should pay the plaintiff's costs of the hearing of the preliminary issue.

   [5] Building Corporation WA Pty Ltd v Marshall [No 2] [59].

Costs of the application for hearing of a preliminary issue

1. The plaintiff contends that it was reasonable for it to oppose the order for a hearing of the preliminary issue.  It contends that it made its submissions in opposition to the application for the hearing of a preliminary issue to be of assistance to the court. 

2. The plaintiff has not shown a sufficient reason not to apply the ordinary rule that costs should follow the event.  The plaintiff should pay the first defendants' costs of the application for the hearing of the preliminary issue.

Costs of application to amend the further amended statement of claim

1. As recorded earlier the plaintiff applied to amend its further amended statement of claim on the eve of the trial and the application was heard on the first morning of the trial.  By the amendment the plaintiff sought to establish that the agreement between the parties included a term that did not appear in the relevant document but was based on conversations between one of the plaintiff's members of staff and the first defendants' daughter.  The amendment was allowed but the plaintiff did not succeed in establishing that the disputed term was a term of the agreement.  The defendants contend that the plaintiff should have known that it would not establish the disputed term.  I do not accept that proposition.

2. Ordinarily a party who amends is required to pay the costs thrown away by reason of the amendment.  In many instances, for practical reasons, the costs thrown away are limited to the costs of consequential amendments to the pleadings.  In this case there were no consequential amendments to the pleadings and it is not apparent that there were any costs thrown away.  That a party ultimately fails on an issue introduced into a pleading following a contested amendment application does not ordinarily disentitle the party to the costs of the amendment application and the court is cautious about apportioning the costs according to success and failure on particular issues.  In my judgment, having regard to the way in which the application unfolded, justice between the parties will be achieved if there is no order as to costs in respect of the amendment application.  This will necessitate to the adjustment to the costs of the hearing to which I have referred above.

Conclusion

1. The orders will be as follows:

   1.The first defendants pay the plaintiff's costs of the determination and hearing of the preliminary issue save for: any costs incurred in connection with preparing and adducing evidence from Mr Craig Melville Smith; and, an allowance in respect of the time spent on 13 December 2021 hearing the plaintiff's application for leave to amend its further amended statement of claim, to be taxed.

   2.The plaintiff pay the first defendants' costs of the application for the hearing of the preliminary issue to be taxed.

   3.There be no order as to costs in respect of the plaintiff's application to amend the further amended statement of claim on 10 December 2021.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

OK

Associate to the Honourable Justice Tottle

8 AUGUST 2022