Grocon Constructors (Qld) Pty Ltd v Juniper Developer No 2 Pty Ltd

Case [2015] QSC 333

SUPREME COURT OF QUEENSLAND

CITATION:

Grocon Constructors (Qld) Pty Ltd v Juniper Developer No. 2 Pty Ltd & Anor [2015] QSC 333

PARTIES:

GROCON CONSTRUCTORS (QLD) PTY LTD
ACN 120 476 495

(plaintiff)

v
JUNIPER DEVELOPERS NO. 2 PTY LTD (RECEIVERS AND MANAGERS APPOINTED)
ACN 123 200 699

(first defendant)

RIDER LEVETT BUCKNALL (QLD) PTY LTD
ACN 055 768 655
(second defendant)

JUNIPER DEVELOPER NO. 2 PTY LTD
(RECEIVERS AND MANAGERS APPOINTED)
ACN 123 200 699
(plaintiff)
v

NORTON ROSE (A FIRM)
(defendant)

FILE NO/S:

BS 9291 of 2011

BS 2106 of 2013

DIVISION:

Trial Division

PROCEEDING:

Applications for costs, written submissions

DELIVERED ON:

27 November 2015

DELIVERED AT:

Brisbane

HEARING DATE:

10, 11, and 12 September 2015

JUDGE:

Peter Lyons J

ORDER:

In proceedings BS 9291 of 2011 the plaintiff is to pay two-thirds of Juniper’s costs of the separate hearing.

CATCHWORDS:

PROCEDURE – COSTS – JURISDICTION – PERSONS NOT PARTIES TO PROCEEDINGS – where a contractor sued its principal for monies owing under a construction contract – where the contractor alleged that the liquidated damages clause, pursuant to which the principal withheld the monies claimed, was void as a penalty – where there was no suggestion that the contractor raised that issue without sufficient foundation, or otherwise improperly –  where, in proceedings against its lawyers, the principal alleged that the manner in which the construction contract was drafted created an unnecessary risk that the liquidated damages clause would be found to be void or unenforceable – where, in a separate hearing in advance of trials, it was determined that the clause was not void for the purposes of both proceedings – where the contractor did not seek, but did not oppose, the principal’s lawyers’ participation in the separate hearing – where the principal’s lawyers were not in a materially different position to advance the case than the principal – where there were obvious practical advantages for the principal’s lawyers in having the validity of the liquidated damages clause upheld at an early stage, including the limitation of damages, for which they may be liable in their proceedings against the principal – whether the contractor’s conduct has made it fair or reasonable to impose on it costs associated with the principal’s lawyers’ participation in the separate hearing

PROCEDURE – COSTS – JURISDICTION – PERSONS NOT PARTIES TO PROCEEDINGS – where there was, as between the principal and its lawyers, at the separate hearing, in substance no issue – where the principal’s lawyers were not in a materially different position to advance the case than the principal – where there were obvious practical advantages for the principal’s lawyers in having the validity of the liquidated damages clause upheld at an early stage, including the limitation of damages, for which they may be liable in their proceedings against the principal – where the contractor did not create any uncertainty about who should be sued for the loss claimed – whether the principal should be liable to pay the lawyers’ costs of…

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Details
AGLC
Grocon Constructors (Qld) Pty Ltd v Juniper Developer No. 2 Pty Ltd [2015] QSC 333
Case
[2015] QSC 333
Decision Date

CaseChat Overview and Summary

In the matter of Grocon Constructors (Qld) Pty Ltd v Juniper Developer No 2 Pty Ltd, the Queensland Supreme Court was tasked with resolving issues related to costs and jurisdiction, particularly concerning the involvement of non-parties to proceedings. The primary dispute arose from a construction contract between Grocon Constructors and Juniper Developer, wherein Grocon sought monies owed under the contract, alleging that a liquidated damages clause was void as a penalty. Juniper, in turn, withheld payment based on this clause and subsequently engaged in separate proceedings against its former solicitors, Norton Rose, to challenge the validity of the clause.

The central legal issues revolved around whether Grocon's conduct warranted the imposition of costs associated with Norton Rose's participation in a separate hearing that determined the validity of the liquidated damages clause. Additionally, the court needed to decide if Juniper should bear the costs of Norton Rose's involvement in that hearing, given the apparent lack of substantive issues between Juniper and Norton Rose at that stage. The court examined the practical advantages for Norton Rose in securing an early validation of the clause, which could limit their potential liability in the proceedings against Juniper.

The court reasoned that despite Norton Rose's success in the separate hearing, the peculiar circumstances of the case, including the limited substantive issues between Norton Rose and Juniper, warranted no costs order in their favour. The court also determined that while Juniper was entitled to an order for costs against Grocon, it was fair to limit this to two-thirds of Juniper's costs of the separate hearing. The court's decision was influenced by the notion that Grocon's conduct did not unjustly benefit Norton Rose, and there were no overriding reasons to impose costs on Juniper for Norton Rose's participation.

In conclusion, the court ordered that Grocon pay two-thirds of Juniper’s costs of the separate hearing, reflecting a balanced approach to the distribution of costs in light of the complex procedural history and the limited direct involvement of Norton Rose in the primary proceedings.

Orders

Orders of the court

In proceedings BS 9291 of 2011 the plaintiff is to pay two-thirds of Juniper’s costs of the separate hearing.

Background

Background to the litigation

On 23 April 2015, in a separate hearing in advance of trials[1] (separate determination), I determined that clause 35.7 of a contract made between Grocon and Juniper was not void on the grounds that it imposed a penalty, and made a declaration to that effect[2]. That determination was made, both in proceedings between Grocon and Juniper (Grocon proceedings), and proceedings between Juniper and Norton Rose (Norton Rose proceedings). Questions have arisen as to the costs orders to be made, as a consequence of that determination.[1] See r 483 of the Uniform Civil Procedure Rules 1999 (Qld).[2] See [2015] QSC 102.Background Juniper engaged Grocon to undertake the design and construction of a development at Surfers Paradise referred to as the Soul Project. Clause 35.7 made provision for the payment by Grocon of liquidated damages for failure to perform the contract in accordance with times specified in it. Norton Rose (then Deacons) acted as Juniper’s solicitor in relation to the preparation of the contract. In the Grocon proceedings, Grocon sued Juniper for monies which it alleged Juniper owed it under the contract, for damages for its breach, and for other relief. Because Juniper had withheld payment of monies on the basis of an asserted entitlement to liquidated damages under clause 35.7, Grocon had in its statement of claim alleged the clause to be void as a penalty, and sought a declaration to that effect[3].[3] See its Statement of Claim filed on 13 October 2011, paras 30-34. It is convenient at this point to note that Grocon made a payment claim under the Building and Construction Industry Payments Act 2004 (Qld) (BCIPA) resulting in an adjudicator’s decision in its favour on 2 June 2011. The adjudicator’s decision reflected a finding that clause 35.7 was void, being penal[4]. By virtue of s 100 of the BCIPA, the making of a payment pursuant to an adjudicator’s decision is provisional in nature[5].[4] See Juniper’s Statement of Claim against Norton Rose filed 6 March 2013 at [58].[5] See Minimax Firefighting Systems Pty Ltd v Bremore Engineering (WA Pty Ltd) [2007] QSC 333 at [48]; J Hutchison Pty Ltd v CADA Formwork Pty Ltd [2014] QSC 63 at [18]. In its counterclaim, Juniper alleged that it was entitled to a little under $34 million as liquidated damages under clause 35.7. Alternatively, it alleged that it was entitled to general damages for delay in an amount particularised at a little over $28.5 million. It alleged that overpayments had been made to Grocon, including by reason of the adjudicator’s decision, and sought relief accordingly[6].[6] See Juniper’s Defence and Counterclaim against Grocon filed 5 February 2014. In its reply, Grocon maintained that clause 35.7 was penal, and accordingly void[7].[7] See Grocon’s Reply against Juniper filed 2 July 2014. As a result of these allegations, on 23 April 2014, in the Grocon proceedings I ordered the determination of the question relating to the validity of clause 35.7 in advance of the trial.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Notwithstanding Norton Rose’s success, the unusual circumstances of this case seem to me to justify making no order for costs in its favour.Conclusion Juniper’s success against Grocon means that it should have an order for costs in its favour against Grocon. However, as indicated, I propose to limit that order. Subject to submissions, I would do that by limiting the order to two-thirds of Juniper’s costs of the separate hearing. I would make no other orders as to costs.

Ratio Decidendi

Legal Principle Established

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