KBR Commercial (WA) Pty Ltd v RHG Construction Fitout and Maintenance Pty Ltd and Joshua Hill (No 2)

[2020] VCC 445

IN THE COUNTY COURT OF VICTORIA

AT Melbourne

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

Case No. CI-20-00114

KBR Commercial (WA) Pty Ltd	Plaintiff
v
RHG Construction Fitout and Maintenance Pty Ltd and Joshua Denny Hill	Defendants

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JUDGE:	Lewitan
WHERE HELD:	Melbourne
DATE OF HEARING:	18 March 2020
DATE OF RULING:	22 April 2020
CASE MAY BE CITED AS:	KBR Commercial (WA) Pty Ltd v RHG Construction Fitout and Maintenance Pty Ltd and Joshua Hill (No 2)
MEDIUM NEUTRAL CITATION:	[2020] VCC 445

REASONS FOR RULING
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Subject:         Application for costs

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T Best	Mornington Legal
For the Defendant	Ms K Dovey	Stork Davies

HER HONOUR:

1 By summons dated 11 February 2020 RHG Construction Fitout and Maintenance Pty Ltd (RHG) and Joshua Denny Hill (Hill) (the defendants) applied for a stay of the proceeding instituted by KBR Commercial (WA) Pty Ltd (KBR) (the plaintiff) pursuant to s20 of the Service and Execution of Process Act 1992 (Cth) (the stay application). The stay application was heard on 18 March 2020.  On 3 April 2020 I published reasons[1] stating that :

[1] KBR Commercial (WA) Pty Ltd v RHG Construction Fitout and Maintenance Pty Ltd and Joshua Hill [2020] VCC 319 (stay application ruling)

(a)      the proceeding should be stayed as the District Court of Western Australia has jurisdiction to determine all the matters in issue between the parties and is the appropriate court to determine those matters.

(b)      any application for costs ought to be filed and served within 7 days.

Should costs be awarded on an indemnity basis?

2 In the ordinary case, costs will follow the event. The defendants succeeded in their application for the proceeding to be stayed pursuant to s 20 of the Service and Execution of Process Act 1992 (Cth). In those circumstances I consider that the plaintiff should pay to the defendants the costs of the stay application.

3       The defendants seek the costs of the stay application on an indemnity basis after 16 March 2020. 

4       The Court’s discretion to award indemnity costs against an unsuccessful party is dependent upon there being “circumstances of the case…such as to warrant the Court…departing from the usual course” of awarding costs on a party-party basis.[2]

[2]Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233.

5       In considering whether the Court should exercise its discretion to award costs on an indemnity basis, I have had regard to the provisions of the Civil Procedure Act 2010 (Civil Procedure Act).  The overarching purpose of the Civil Procedure Act in relation to civil proceedings is “to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.”[3]  In making any order, a court shall further the overarching purpose by having regard to the efficient use of judicial and administrative resources[4], the timely determination of the civil proceeding[5] and the degree to which each person to whom the overarching obligations apply has complied with the overarching obligations in relation to the proceeding.[6]

[3]Civil Procedure Act s 7 (1).

[4]Civil Procedure Act s 9 (1) (d).

[5]Civil Procedure Act s 9 (1) (f).

[6]Civil Procedure Act s 9 (2) (e).

6       On 22 October 2018 RHG forwarded a letter of intent (the letter of intent) to KBR offering to form a contract to carry out the supply and installation of kitchen equipment at the New Esplanade Hotel.[7]  The letter of intent states that “liquidated damages for late completion will be N/A.”

[7] Exhibit JDH 6 to the affidavit made by Hill on 10 February 2020 (Hill’s affidavit).

7       RHG contended that the main dispute between the parties is “whether KBR is liable to RHG to pay damages for failure to reach practical completion on time.”[8]

[8] Hill’s affidavit, [21].

8       The contention that RHG is entitled to damages from the plaintiff was raised for the first time on 7 June 2019 and was rejected by the plaintiff at that time.[9]  RHG has failed to bring proceedings since June 2019.

[9] Affidavit made by Andrew Mark Robertson on 13 March 2020, [19].

9       By letter of demand dated 25 July 2019 the plaintiff’s solicitors advised RHG that RHG is indebted to the plaintiff in the sum of $153,167.41 for services performed by KBR at the Esplanade Hotel and demanded that RHG pay the debt.

10      Following service in July 2019 of the demand for payment of the debt the defendants were sent an unfiled copy of the plaintiff’s proposed claim in November 2019. By letter dated 27 November 2019[10] the plaintiff’s solicitors referred to the letter of demand and stated:

[10] Exhibit ADS-2 to affidavit made by Anthony Donald Snooks on 9 April 2020.

We refer to our letter of demand dated 25 July 2019 sent to you and made in relation to this matter.  We have not received any satisfactory response to date.

We are of the view that for the reasons already outlined in our earlier correspondence RHG Construction Fitout & Maintenance Pty Ltd (ACN 159 703 349 (RHG Construction) is indebted to KBR Commercial (WA) Pty Ltd (KBR Commercial) in the sum of $153,167.41 (inclusive of GST) for work and labour done by KBR Commercial at The New Esplanade Hotel.

In the circumstances where you dispute this position we are instructed to file and serve the attached Court document.  The proposed statement of claim seeks payment of the above sum as a debt.  Alternatively it seeks corresponding damages, or relief on a quantum meruit basis.  The document names RHG Construction and its director as defendants.  Please note the statement of claim is unfiled.  At this stage you are not required to instruct solicitors to file a notice of appearance or any defence.

Notwithstanding the above and in an effort to avoid the costs of litigation and the ongoing dispute between the parties, our client is prepared to compromise its claim and will accept the sum of $140,000 (inclusive of GST) in full and final settlement of its claim against RHG Construction and its director, payable by no later than the close of business on Friday, 20 December 2019.

Please notify us of your position in relation to the above by 4pm on Friday, 6 December 2019.  In the event that we do not receive a satisfactory response we have instructions to proceed to file the statement of claim.  Should such proceedings be commenced we will produce this open letter to the Court in relation to costs and other relevant matters.

11      The defendants did not respond to the correspondence sent in November 2019 attaching an unfiled claim (in the form of the present claim). Accordingly   the plaintiff filed the Statement of Claim on 15 January 2020.  It was only after the plaintiff filed its claim that the defendants objected to the chosen jurisdiction.

12      As a basis for claiming indemnity costs, the defendants now rely on the letters dated 24 February and 12 March 2012 by the solicitors of RHG to the plaintiff.  The letter dated 12 March 2012 states:

We refer to our clients’ stay application.

As previously explained, the issue to be determined is whether the District Court of Western Australia is the appropriate court to determine the matters in dispute.

If this was a simple matter of a liquidated debt Mr Hill would not be a party to the proceedings.  In our opinion, the joinder of Mr Hill for what appears to be tactical reasons, in and of itself, renders your client’s resistance to the stay application futile.

As a gesture of goodwill and for purely commercial reasons and to avoid the parties incurring further costs with respect to a stay application (instead of the determination of the matters in dispute) we are instructed that our clients will consent to the following orders:

1.the proceedings be and are hereby stayed pursuant to section 20 of the Service and Execution of Process Act 1992 (Cth); and

2.there be no order as to costs.

This offer remains upon [sic] until 10.00 am EST on 16 March 2020 after    which time it will lapse and no longer capable of acceptance.

Our clients may rely on this letter on the issue of costs.

13      Costs are ultimately in the discretion of the Court.  In Keddie v Foxall the Full Court of the Supreme Court directed the trial judge to consider whether any acts or omissions of the plaintiff or one of them, either personally or by their legal advisers, had occasioned unnecessary costs.[11]

[11] [1955] VLR 320, 325 (Lowe, Martin and O’Bryan JJ).

14      Having considered the whole of the evidence and the submissions made by the parties, in my view the Court should not exercise its jurisdiction to order that the plaintiff pay the defendant’s costs on an indemnity basis.  As I have previously stated, the defendants failed and refused to respond to the plaintiff’s demand dated 25 July 2019 requiring payment of the sum of $153,167.41.  The defendants failed and refused to respond to the correspondence forwarded by the plaintiff’s solicitors attaching an unfiled copy of the plaintiff’s claim and seeking a response from the defendants.   The defendants only disputed the plaintiff’s claim and contested jurisdiction after the plaintiff filed and served the statement of claim in this proceeding. 

15      In these circumstances I propose to order that the plaintiff pay the defendants’ costs of the stay application on a standard basis.

Plaintiff’s request for further conditional orders

16 The plaintiff now seeks an order that the stay of the proceeding pursuant to s20 of the Civil Procedure Act be granted on condition that the first defendant file within 30 days a claim against the plaintiff in the District Court of Western Australia in accordance with the undertaking to do so given by Hill at paragraph 10 of the affidavit made by Hill on 16 March 2020 (Hill’s second affidavit).

17      In paragraph 10 of Hill’s second affidavit, Hill stated:

If the stay is granted, RHG undertakes to commence proceedings against KBR in relation to the Esplanade Hotel project in the District Court of Western Australia seeking damages within one month of this proceeding being stayed, unless KBR has already commenced proceedings against RHG in Western Australia in the meantime.

18      In my view the order that the proceeding be stayed should not be conditional. As stated in the stay application ruling[12], the District Court of Western Australia has jurisdiction to determine all the matters in issue between the parties and is the appropriate court to determine those matters.  The plaintiff is able to institute proceedings in the District Court of Western Australia if the defendants do not comply with the undertaking to commence proceedings.

[12][2020] VCC 319.

Orders

19      Having regard to the matters referred in the above paragraphs, the Court orders that:

1 The proceeding is stayed pursuant to s20 of the Service and Execution of process Act 1992 (Cth).

2   The defendants’ conditional appearance filed on 16 March 2020 remains conditional.

3 The plaintiff pay the defendants costs of this application on a   standard basis to be taxed in default of agreement.