Chen v Kevin McNamara & Son Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

LIMIN JAMES CHEN and

MEI FANG XU

S APCI 2009 3826

Appellants

v

KEVIN McNAMARA & SON PTY LTD
(ACN 072 144 579)

First Respondent

and

GEORGE P DEUTSCH (NO 2)

Second Respondent

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JUDGES	MAXWELL P, REDLICH JA and ROBSON AJA
WHERE HELD	MELBOURNE
DATE OF HEARING	15 September 2011
DATE OF JUDGMENT	20 September 2012
MEDIUM NEUTRAL CITATION	[2012] VSCA 229
JUDGMENT APPEALED FROM	[2009] VSC 294 (Hargrave J)

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COSTS – Application for costs – Building contracts – Indemnity costs – Whether first respondent entitled to recover indemnity costs pursuant to contractual indemnity provision – When contractual provisions may inform curial discretion – Whether the appellant’s obligation to pay ‘any costs and fees’ arising from legal proceedings relating to the contract entitled the respondent to indemnity costs – Kheirs Financial Services Pty Ltd v Aussie Home Loans Pty Ltd [2010] VSCA 355 discussed – Abigroup Ltd v Sandtara Pty Ltd [2002] NSWCA 45 discussed – Section 24(1) of the Supreme Court Act 1986 – Application refused – Costs awarded on a party/party basis.

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Appearances:	Counsel	Solicitors
For the Appellants	Francis V Gallichio
For the First Respondent	Mr Philip Marzella	Russell Kennedy
For the Second Respondent	No appearance

MAXWELL P:

1. I have had the advantage of reading in draft the reasons of Redlich JA. I agree that the Builder’s costs of appeal should be assessed on a party/party basis, for the reasons which his Honour gives.

REDLICH JA:

1. Following a dispute in relation to the construction of part of their residential property, the appellants (‘the Owners’) appealed against the dismissal of their proceedings in the Commercial and Equity Division of the Supreme Court of Victoria, in which they had sought declarations that an arbitration initiated by the first respondent (‘the Builder’) was void and that the appointment of the second respondent as arbitrator was also void.  The appeal by the Owners was dismissed.

1. The Builder seeks an order that the Owners pay his costs of the appeal on an indemnity basis.  He submits he is contractually entitled to such costs by virtue of clause 4 of the Standard Conditions of Agreement of the Building Contract, the relevant part of which states:

The Owner shall pay to the Contractor:

Any costs and fees incurred by the Contractor in enforcing or further securing its rights under this Agreement.

1. The Builder submitted that the phrase ‘any costs and fees’ in enforcing his rights was reflective of an objective intention of the parties that he was to be reimbursed for any costs and fees incurred at a higher measure of costs than party and party costs, namely on an indemnity basis.

1. The Owners contended that the Court’s discretion was not to be informed by the contractual provision, as it did not provide in unequivocal language that costs were to be paid on a ‘special basis’.[1]  Therefore the Builder should be awarded his costs on a party and party basis.  

[1]Appellants’ submission, [4].

1. Section 24(1)…