H & M Constructions (NSW) Pty Ltd v Golden Rain Development Pty Ltd (No 2)

[2021] NSWSC 1475

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

H & M Constructions (NSW) Pty Ltd v Golden Rain Development Pty Ltd (No 2) [2021] NSWSC 1475

Hearing dates:

On the papers

Date of orders:

16 November 2021

Decision date:

16 November 2021

Jurisdiction:

Equity - Technology and Construction List

Before:

Stevenson J

Decision:

Further security for costs ordered of $150,000

Catchwords:

COSTS – security for costs – whether further security should be ordered

Legislation Cited:

Evidence Act 1995 (NSW)

Corporations Act 2001 (Cth)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

H & M Constructions (NSW) Pty Ltd v Golden Rain Development Pty Ltd [2021] NSWSC 708

Category:

Consequential orders

Parties:

H & M Constructions (NSW) Pty Ltd (Plaintiff/Respondent)
Golden Rain Development Pty Ltd (Defendant/Applicant)

Representation:

Counsel:
F Cameron (Plaintiff/Respondent)

Solicitors:
Pinsent Masons (Plaintiff/Respondent)
Allens (Defendant/Applicant)

File Number(s):

2021/115569

Judgment

1. The background to these proceedings is set out in my judgment of 16 June 2021. [1]

   1. H & M Constructions (NSW) Pty Ltd v Golden Rain Development Pty Ltd [2021] NSWSC 708.

2. I shall adopt the same abbreviations here.

3. H & M is a builder. Golden Rain is a property developer. The proceedings concern the impact of a “Conditional Practical Completion Certificate” purportedly issued under a construction contract between the parties. It also concerns the circumstances in which Golden Rain seeks liquidated damages under that contract and Golden Rain’s call on the bank guarantees referred to in my earlier judgment.

4. As set out in my earlier judgment, H & M does not dispute that the Court’s jurisdiction to order security is enlivened.

5. On 16 June 2021, I ordered that H & M provide security in the sum of $350,000 in respect of Golden Rain’s costs up to and including a mediation to be held by 30 August 2021.

6. That mediation has occurred. The proceedings have not settled.

7. Now, by Notice of Motion filed on 15 October 2021, Golden Rain seeks further security for costs.

8. As pressed in written submissions, the security sought is:

1. $110,448 for costs already incurred; and

2. $213,288 for costs up to the time when the matter is set down for hearing.

9. Again, Golden Rain’s application is supported by expert evidence from its costs assessor, Mr Nicholas.

10. As to the costs already incurred, Mr Nicholas estimates that Golden Rain’s recoverable costs to date are $460,447.86.

11. The amount of $110,448 now sought by Golden Rain is the difference between that figure and the $350,000 security already given.

12. The figure of $350,000 was based on Golden Rain’s solicitor’s then estimate that the actual costs that Golden Rain would incur up to the mediation would be $503,328. The actual costs incurred by Golden Rain were $667,741.

13. One explanation given for the increased costs is the greater than anticipated costs of preparing Golden Rain’s affidavits.

14. H & M contends that many of these affidavits will prove to be irrelevant to the issues in the proceedings. Golden Rain disputes that and contends that the evidence is relevant to whether H & M satisfied conditions in the Conditional Certificate, the validity and satisfaction of which underpins H & M’s claims and as to whether Golden Rain was entitled to call on the bank guarantees.

15. I am not in a position to resolve that issue.

16. It does appear to be true, as was submitted on behalf of H & M, that Mr Nicholas has not made an assessment of the reasonableness of the work undertaken on behalf of Golden Rain. Rather, he has applied various discounts to the actual fees charged to Golden Rain for the purposes of assessing the likely recoverable costs.

17. Mr Nicholas’ estimate of $460,447.86 as a recoverable Past Security Sum is an increase on the figure of some $347,000 to which he opined earlier in the year.

18. In any event, as I have already ordered security for Golden Rain’s costs to the date of mediation, I am not persuaded that I should now depart from that figure and order increase security for incurred costs.

19. Golden Rain’s claim for future costs is also the subject of expert opinion by Mr Nicholas.

20. $41,625 of the further $213,288 sought is Mr Nicholas’s estimate of the recoverable costs referrable to an application that Golden Rain has foreshadowed making under s 192A of the Evidence Act 1995 (NSW) for an advanced ruling in relation to a privilege claim that Golden Rain seeks to make.

21. H & M asserts that that application is “doomed to fail”. I am not in a position to express any view about that, but am not prepared to order security, at this stage, for that application. If it is successful, and if Golden Rain obtains a costs order, this aspect of the question of security can be revisited.

22. A further element of some $117,000 of the amount sought for future costs relates to the anticipated costs of discovery. This is said to be likely to involve some 515 hours of work by Golden Rain’s legal team which does appear to be a generous allowance.

23. Overall, and adopting the broad-brush approach that is necessary in applications such as this, the further amount of security I propose to allow is $150,000.

24. In those circumstances, I make the following orders

1. Pursuant to Uniform Civil Procedure Rules r 42.21 and s 1335(1) of the Corporations Act 2001 (Cth), I order that the plaintiff provide further security in the sum of $150,000 in respect of the costs of the defendant up to and including the date on which these proceedings are set down for trial.

2. I grant the defendant liberty to apply for further security in relation to any application it makes under s 192A of the Evidence Act 1995 (NSW) in the event that such an application is made and the defendant obtains a costs order in its favour in relation to that application.

**********

Endnote

Amendments

08 February 2023 - Case name amended

Decision last updated: 08 February 2023