Delt Constructions Pty Ltd ABN 49604204015 v Able Business Pty Ltd ACN 246456948 & Anor

[2024] NSWDC 91

District Court

New South Wales

Medium Neutral Citation:

Delt Constructions Pty Ltd ABN 49604204015 v Able Business Pty Ltd ACN 246456948 & Anor [2024] NSWDC 91

Hearing dates:

On the papers

Date of orders:

27 March 2024

Decision date:

27 March 2024

Jurisdiction:

Civil

Before:

Acting Judge I Coleman SC

Decision:

(1) That each party to bear its own costs, including reserved costs, prior to 22 May 2023.

(2) That the Defendants pay the Plaintiff’s costs of and incidental to the proceedings as agreed or assessed on a party and party basis from 22 May 2023.

(3) That the Defendants pay the Plaintiff’s costs of this motion.

Catchwords:

COSTS – where plaintiff achieved overall success – whether presumption in favour of costs following the event should be departed from in whole or part

Legislation Cited:

Home Building Act 1989 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Commonwealth v Gretton [2008] NSWCA 117

Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52; [2007] HCA 56

Holt v Wynter (2000) 49 NSWLR 128

McCusker v Rutter [2010] NSWCA 318

New South Wales v Stanley [2007] NSWCA 330

Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11

Williams v Lewer (1974) 2 NSWLR 91

Category:

Costs

Parties:

Plaintiff: Delt Constructions Pty Ltd ABN 49604204015
First Defendant: Able Business Pty Ltd ACN 246456948
Second Defendant: Chung Sheng Lu

Representation:

Counsel:
Plaintiff: Mr A Joseph
Defendant: Mr P Bolster

Solicitors:
Plaintiff: Kheir Lawyers
Defendant: Juris Cor Legal

File Number(s):

2022/00161573

Publication restriction:

None

Judgment

1. On 1 December 2023, for the reasons which were then given, the Court entered a verdict and Judgment for the Plaintiff in these proceedings. The Court’s orders provided (order 3) that, any party seeking an order other than an order that the Defendants pay the Plaintiff’s costs file and serve submissions in support of such order.

2. On 15 December 2023 the Defendants filed submissions in support of their claim that the Plaintiff be ordered to pay the Defendants’ costs of the proceedings or, in the alternative, that each party pay their own costs of the proceedings.

3. On 19 December 2023 the Plaintiff filed submissions opposing the making of orders in the terms sought by the Defendants, so that order 2 of the Orders of 1 December 2023, which provided that the Defendants pay the Plaintiff’s costs on the ordinary basis, would not be disturbed.

Defendants’ submissions

4. The Defendants submitted, correctly, that there was, and had never been, any issue that the work performed by the Plaintiff which gave rise to its claim against the Defendants was residential building work, which was carried out whilst there was not in force a contract of insurance as was required by s 92 of the Home Building Act1989 (NSW) (HBA). It was submitted, that by the commencement of the trial, the only basis upon which a claim was made against the Defendants required the Plaintiff to persuade the Court to exercise its discretion under the HBA to permit the Plaintiff to make its claim in quantum meruit. Whilst that was the major issue, and although it had fallen away by the end of the hearing, quantum was also in issue.

5. The Defendants referred to ss 94(1) and 92(2) of the HBA and submitted [6] that the effect of those sections was that the Plaintiff could not properly have commenced these proceedings in June 2022 by filing a Statement of Claim in reliance upon a building contract between the Plaintiff and the First Defendant. If “properly” was intended to imply “successfully”, the Court agrees with that submission.

6. The Defendants submitted [8], accurately, that the Plaintiff’s claim for relief pursuant to s 94(1A) of the HBA was not made until the filing of the Reply on 22 May 2023. The “corollary” of that was submitted [9] to be that seeking to enforce the contract without claiming a remedy under s 94(1A) would contravene s 92(2) of the HBA. The Defendants submitted that “critically, the second prohibition in s 92(2) applied until Judgment was delivered”, the effect of which was asserted to be that the Plaintiff was “prohibited from receiving payment for the services in any event”.

7. The Defendants advanced three reasons why the relief sought by them should be granted.

8. The Defendants submitted [11], correctly, that the only way the Plaintiff could be paid for the work done by it was if relief were granted to pursue a claim in reliance upon s 94(1A) of the HBA. It was submitted that those circumstances provided a “compelling reason why costs should not follow the event”. The Defendants submitted [14] that the need for relief under s 94(1A) of the HBA was “entirely the fault of the Plaintiff”. The court’s findings in the substantive proceedings involved a less malign view of the reasons why insurance was not effected.

9. The second reason why the parties should bear their own costs was submitted [16] to be that, by electing to proceed solely in reliance upon s 94(1A) of the HBA, the Plaintiff “abandoned all of the other claims, including the fact intensive (sic) estoppel claim pleaded in the Reply”. The practical effect of the Plaintiff doing so was submitted to be that costs associated with the preparation for the abandoned case had been wasted by both parties. Whilst, necessarily, the Plaintiff needed to enliven s 94(1A) if it were to succeed with its claim in quantum meruit, evidence relevant to “abandoned” claims remained relevant to the exercise of discretion pursuant to the section.

10. The third reason why the parties should bear their own costs was submitted [16] to be the “significant disproportion between the amount claimed by the Plaintiff in its Statement of Claim, the amount recovered by the Judgment and the Plaintiff’s costs of the proceedings”. The Defendants submitted that the Plaintiff’s evidence in support of its quantum meruit claim of $127,500 was essentially rejected, with the Plaintiff ultimately succeeding on the basis of expert evidence obtained by the Defendants in the sum of $75,549.10 which was submitted to equate to 59.25% of the amount claimed in the Plaintiff’s Statement of Claim.

11. The Defendants referred to the Judgment of Sheller JA in Holt v Wynter (2000) 49 NSWLR 128 in which his Honour said at [121] that:

“In relation to costs ordinarily a successful applicant, who has allowed him or herself to get out of time, should pay the costs of the application unless the respondent’s opposition was wholly unreasonable. Although Judge Cantrill was satisfied that the evidence explained and excused the applicant from any responsibility for the delay, the fact remains that one or more of the solicitors she retained were responsible for the delay. The respondent was not. In the circumstances, particularly having in mind the question raised about the availability of medical records, I do not regard the respondent’s decision to resist the application as unreasonable.”

12. With respect, the Court struggles to accept that his Honour’s Judgment materially assists the determination of the present dispute, save to the extent that it is asserted that the Plaintiff’s conduct has been unreasonable whereas [20] the Defendants’ approach to the litigation “has hardly been unreasonable”. In those circumstances it was submitted that relief should be granted in the terms sought by the Defendants.

Plaintiff’s submissions

13. In reply, the Plaintiff submitted that it had been “substantively successful in the proceedings” and that costs should accordingly follow the event in accordance with UCPR 42.1. Although submitting that the Plaintiff’s Statement of Claim “picked up the essential elements of a s 94(1A) claim”, it was properly conceded that the Statement of Claim did not plead the provision itself. The absence of doing so was not immaterial in the Court’s view. The Plaintiff submitted that the Defendants were never “in any doubt what the battleground was between the parties in relation to the quantum meruit” [4]. The Court agrees that, from the time of the filing of the Plaintiff’s Reply on 22 May 2023 the Defendants were not in any doubt as to the basis upon which the Plaintiff sought relief.

14. The Plaintiff submitted [6] that the Defendants had not identified any authority in support of the proposition that a plaintiff who successfully relies on s 94(1A) of the HBA should not have the benefit of the normal rule as to costs in accordance with UCPR 42.1. The Court does not understand the Defendants to submit that successful reliance upon s 94(1A) of the HBA should preclude an order for costs in favour of that party. The Defendants’ complaint rather seems to be that the absence of overt reliance on s 94(1A) of the HBA prior to 22 May 2023 militated against making an order that costs follow the event. The Plaintiff submitted, and the Court accepts, that there was “simply no reason as a matter of general principle why that successful plaintiff ought not be compensated for having to make out its claim” pursuant to s 94(1A) of the HBA.

15. To the extent that the Defendants inferentially asserted disentitling conduct on behalf of the Plaintiff, the Court agrees with the Plaintiff’s contentions at [8] that there was no such conduct.

16. The Plaintiff submitted that the abandonment of parts of its case did not add to the duration of the case or render unnecessary any work done by either party to prepare for the hearing. The Plaintiff submitted [10], correctly, that the Defendants’ resistance to its claim required it to meet all aspects of the defence, including whether the work was done, the quality of that work, as well as alleged illegality.

17. Whilst acknowledging that the Plaintiff was only successful in claiming a lesser amount than it claimed in the Statement of Claim, it was submitted that the Plaintiff was “still successful in achieving a substantial Judgment” [11]. It was submitted [12], and the Court accepts, that it is not usually the role of the Court to assess what costs should be allowed on an ordinary basis. Generally, that is a matter for agreement or assessment.

18. The Plaintiff referred [13] to the costs of the Motion for security for costs determined on 10 March 2023 and the basis of its dismissal. The Court ordered that costs of the motion be costs in the cause. The Plaintiff submitted [17] that whether the Defendants’ conduct had been reasonable is “beside the point given that costs are compensatory and not punitive in nature” (Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11).

19. The Plaintiff submitted [18] that it had adopted a “sensible approach” to the hearing in accepting the Defendants’ expert evidence, and not continuing with a separate claim based on estoppel and “should not be punished for doing so”. The Plaintiff reiterated [19] its contention that all the evidence remained relevant as part of the “factual matrix” in which the Court determined that it was just and equitable for the Plaintiff to receive payment in accordance with s 94(1A) for work performed by it for the Defendants.

Consideration

20. The Court has a wide discretionary power with respect to costs, which is liberally construed (New South Wales v Stanley [2007] NSWCA 330). The discretion to displace the presumption that costs follow the event is enlivened where the overall justice of the case warrants some other order (McCusker v Rutter [2010] NSWCA 318). Underlying the exercise of discretion is fairness, having regard to what the court considers to be the responsibility for incurring costs (Commonwealth v Gretton [2008] NSWCA 117).

21. The Court accepts that the Plaintiff has been successful on an overall basis and that, prima facie, is entitled to its costs of the proceedings on the ordinary basis (Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52; [2007] HCA 56).

22. It is for the Defendants, as the unsuccessful parties, to establish a basis for departure from the usual rule (New South Wales v Stanley [2007] NSWCA 330). Nothing advanced on behalf of the Defendants establishes a basis in reason or justice for making an order for costs in their favour (Williams v Lewer (1974) 2 NSWLR 91).

23. Nothing to which the Court has been referred establishes, in law or logic, that the Plaintiff’s success having been necessarily reliant upon securing relief pursuant to s 94(1A) of the HBA means that, if it is otherwise properly entitled, the Plaintiff should be denied an order for costs. The Defendants have not directed the Court to any authority supportive of their contention.

24. The Court agrees with the Plaintiff that, in the present circumstances, the quantum of costs incurred by the parties is not a relevant consideration. Costs which are disproportionate to the amount which is ultimately in dispute or awarded are not uncommon in civil litigation, particularly in building cases. Why that is so is not hard to understand, and generally involves no impropriety on the part of legal practitioners. There is nothing to suggest in this case that that is not so. The Court accordingly is not persuaded by the third reason advanced by the Defendants in support of the relief sought by them.

25. The Court is not persuaded, essentially for the reasons advanced by the Plaintiff, that either the Plaintiff’s pleaded reliance upon s 94(1A) of the HBA or its abandonment of other causes of action meant that any preparation of the case for hearing was thereby rendered unnecessary, and the costs of such preparation thus wasted. The Defendants put the Plaintiff to proof of each element of its case. At least from 22 May 2023, the evidentiary and legal rules of engagement were clear, and remained so throughout the hearing. The Plaintiff’s abandonment of part of its claim, and acceptance of the Defendants’ expert opinion with respect to quantum should not be held against it. Doing so did not render hearing time wasted. Nor was it done in the face of certain, or probable failure to prove quantum in reliance upon its own evidence. The Plaintiff’s witnesses were found to be credible. No basis for rejection of their evidence emerged.

26. The first reason for departing from the usual rule advanced by the Defendants requires careful consideration. As the Defendants submitted, the Plaintiff was necessarily reliant upon a grant of discretionary relief pursuant to s 94(1A) of the HBA. As the Court’s reasons for its decision on 1 December 2023 recorded, the Plaintiff bore the onus of proof with respect to that issue. As the Court’s reasons also confirm, relief in the present circumstances was not necessarily assured, or a formality. Without being critical of the Plaintiff, it should have been apparent prior to 22 May 2023 that, irrespective of the merits of any claim made by it, in the absence of a grant of discretionary relief pursuant to s 94(1A) of the HBA, the Plaintiff could not recover any monies for work done for the Defendants.

27. The objective of orders for costs is to do justice between the parties. It is difficult to accept that, prior to 22 May 2023, the Defendants should be liable for the costs of a claim which could not succeed. The defects in the Plaintiff’s claim prior to that date were not merely formal. Different considerations apply after that date. The Plaintiff was successful on an overall basis with its claim as it was then articulated. The Defendants have not demonstrated a sufficient basis for rebutting the presumption that the Plaintiff should have its costs from 22 May 2023.

28. The Court concludes that to award the Plaintiff its costs on a party and party basis from the date of its Reply of 22 May 2023 would be fair in all the circumstances, and in the interests of justice. The effect of that finding is, that each party will bear its own costs, including reserved costs, prior to that date.

Orders

29. The Court accordingly orders:

1. That each party to bear its own costs, including reserved costs, prior to 22 May 2023.

2. That the Defendants pay the Plaintiff’s costs of and incidental to the proceedings as agreed or assessed on a party and party basis from 22 May 2023.

3. That the Defendants pay the Plaintiff’s costs of this motion.

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Decision last updated: 27 March 2024