KDR Gold Coast Pty Ltd v CPB Contractors Pty Ltd

[2020] QSC 303

SUPREME COURT OF QUEENSLAND

CITATION:

KDR Gold Coast Pty Ltd v CPB Contractors Pty Ltd [2020] QSC 303

PARTIES:

KDR GOLD COAST PTY LTD

ACN 150 236 936
(applicant)

v
CPB CONTRACTORS PTY LIMITED
ACN 000 893 667

(respondent)

FILE NO/S:

BS No 6528 of 2020

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

1 October 2020

DELIVERED AT:

Brisbane

HEARING DATE:

On the papers

JUDGE:

Bradley J

ORDER:

The Order of the Court is that:

1.   The respondent pay the applicant’s costs of the proceeding to be assessed on the standard basis.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW EVENT – EVENT: WHAT CONSTITUTES – where the applicant sought an order for specific performance and a declaration in relation to a contractual dispute resolution process it had commenced involving the respondent – where the application was adjourned part-heard, by consent, pending the parties’ anticipated execution of an expert determination agreement on terms satisfactory to each of them – where the agreement was executed, obviating any need for the making of an order or declaration – where the respondent submits that the applicant was not successful and should be ordered to pay its costs – whether the applicant obtained the outcome sought

Uniform Civil Procedure Rules 1999 (Qld), r 681

Latoudis v Casey (1990) 170 CLR 534, cited

COUNSEL:

M Trim for the applicant

M Hickey for the respondent

SOLICITORS:

DLA Piper for the applicant

MinterEllison for the respondent

1. The applicant (KDR) and the respondent (CPB) are parties to a written agreement in the form of a deed made on 28 April 2016 (the deed).[1]  KRD operates and maintains the Gold Coast Light Rail system.  Its engagement to perform those activities was heralded in the recitals to the deed.  At the date of the deed, CPB had been engaged under another agreement to design and construct Stage 2 of that system. 

   [1]As well as KDR and CPB, there are two other parties to the deed: GoldLinQ Pty Ltd and GoldLinQ2 Pty Ltd.  These entities have an agreement with the State of Queensland about the Gold Coast Light Rail project.  Neither is a party to this proceeding.

2. A dispute arose between KDR and CPB about works performed by CPB on the Gold Coast Light Rail system.  On 17 June 2020, KDR filed an application seeking an order that CPB execute an expert determination agreement in respect of the dispute and a declaration that a letter sent by CPB to KDR was not a “notice of dispute” within the meaning of the deed and did not commence any expert determination process.  The application was heard on 21 August 2020, on which day it was adjourned by consent pending the parties’ anticipated execution of an expert determination agreement (but not before a hearing occupying almost three hours of the Court’s time).

3. On 8 September 2020, KDR’s solicitor advised the Court that an expert determination agreement had been executed by the parties.  In accordance with directions made on 21 August 2020, the parties were then to file and serve written submissions on costs by 15 September 2020.  Owing to the transcript of the hearing not being provided to the parties until the morning of 15 September 2020, the parties were allowed until 23 September 2020 to file and serve their submissions on costs.

4. Having considered these submissions, I am satisfied CPB should pay KDR’s costs of the application to be assessed on the standard basis.  To explain why this is the case, it is necessary to briefly set out the background to the parties’ dispute.

   The provisions of the deed

5. By clause 16 of the deed, the parties agreed on certain matters about dispute resolution.  These relevantly included:

   (a)By clause 16.1(a):

   “… if any dispute … arises between any or all of the parties in respect of any fact, matter or thing, arising out of or in any way in connection with, this deed, then a party may give a Notice of Dispute to the party with whom the dispute has arisen.”

   (b)By clause 16.1(c):

   “Within 2 Business Days of receiving a Notice of Dispute, the parties to the dispute will meet to attempt to resolve the dispute.”

   (c)By clause 16.1(d):

   “If any part of the dispute remains unresolved after the meeting referred to in clause 16.1(c), within 5 Business Days of receiving a Notice of Dispute, senior executives of the parties to the dispute will meet to attempt to resolve the dispute.”

   (d)By clause 16.1(e):

   “If any part of a dispute between [KDR] and [CPB] remains unresolved following the meetings referred to in clauses 16.1(c) and 16.1(d), either party to the dispute (the escalating party) may escalate the dispute to expert determination under clause 16.2.”

   (e)By clause 16.2(a):

   “If a dispute is referred to expert determination under this deed then an Expert will be appointed by the parties to the dispute:

   (i)as agreed between the senior executives of the parties; or

   …”

   (f)By clause 16.2(d):

   “The parties must enter into an agreement with the Expert on the terms contained in Schedule 9 of the Project Deed provided that the rules for expert determination contained in part 2 of Schedule 9 of the Project Deed (Rules) be amended to provide that the Expert must make a determination within 28 days of a dispute being referred to the Expert (Expert Determination Agreement).”

   (g)By clause 16.2(e):

   “The parties must not withhold agreement to any:

   (i)amendment the Expert requests to be made to those terms contained in the Expert Determination Agreement provided the amendment is reasonable and does not conflict with this clause 16.2; or

   (ii)reasonable fees and disbursements the Expert requests to be set out in the Expert Determination Agreement between the parties and the Expert.”

6. As clause 16.2(d) indicates, some of the parties to the deed entered into another deed which includes in schedule 9 the form of an Expert Determination Agreement and the Rules for Expert Determination to apply under that form of agreement.  These were incorporated into the deed by reference.  The form of agreement has places where the parties are to insert relevant details.  As well as the date of the agreement, the identity of the Expert[2] and the notice details for communication, these include a description of the Dispute. 

   [2]Defined in clause 1.1 of the deed as a suitably independent, qualified and experienced expert appointed by the parties pursuant to clause 16.2(a).

   Facts

7. On 30 October 2019, KDR sent CPB a notice of dispute.  This formal step was preceded by at least six months of interaction between KDR and CPB about alleged defects and loss alleged to have been caused by rectification work.

8. On 22 November 2019, KDR notified CPB that it escalated the dispute the subject of the notice to expert determination under clause 16.2.  In the interim, it appears, the meetings required by clauses 16.1(c) and (d) had occurred and the dispute had not been resolved.

9. On 2 December 2019, CPB agreed to the appointment of Mr Craig Walsh as the Expert.  That was nine months ago.

10. In December 2019, KDR proposed parties describe the Dispute in the Expert Determination Agreement as “that set out in [KDR’s] Notice of Dispute dated 30 October 2019”. On 9 January 2020, CPB rejected that. 

11. During exchanges in January and February 2020, KDR sought to accommodate CPB’s position by offering to add a paragraph to the description referring to CPB’s contentions about the underlying matters.  That also was rejected by CPB.

12. On 28 February 2020, KDR offered to agree to allow the Expert to determine the description of the Dispute.  Although this was beyond the scope of what an expert might usually be asked to do, I am satisfied it was a genuine attempt by KDR to move the process along.  It also was rejected by CPB. 

13. In May 2020, KDR’s proposal that the Dispute be identified by reference to its notice of dispute was again rejected. 

14. On 20 May 2020, CPB sent KDR a letter purporting to give notice of a new and separate dispute between the parties about the “description of the Dispute” to be included in the Expert Determination Agreement. 

15. On 5 June 2020, KDR made a last attempt to have CPB sign an Expert Determination Agreement, advising that if CPB failed to sign and return the agreement by the close of business on 10 June 2020, KDR would commence proceedings.

16. On 10 June 2020, CPB replied asserting that it could validly give notice of a separate dispute about the description of the Dispute and enclosing a notice purportedly escalating the dispute about the Dispute.  It goes without saying that CPB did not sign and return the Expert Determination Agreement.

17. On 17 June 2020, KDR commenced this proceeding.

18. On 26 June 2020, Bond J made an Order, by consent, providing directions for the filing and service of evidence and written submissions and for the listing of the application to be heard in half a day in the civil list after 31 July 2020.

    The hearing

19. The matter was heard on 3 September 2020.  Mr Trim of counsel, for KDR, read his client’s material and made submissions for about one hour and forty minutes.  In the course of those submissions a number of matters were identified that might be the subject of specific instructions from the parties. 

20. The court adjourned for twenty minutes to allow time for any specific instructions to be taken. 

21. When the court resumed, Mr Hickey of counsel, for CPB, then addressed for a little short of an hour.

22. Towards the end of that time, I suggested to Mr Hickey a preliminary view that the matters in dispute (i.e. in the Dispute) “are the matters that are described in paragraphs 29 to 32” of KDR’s notice of dispute dated 30 October 2019, as the earlier paragraphs were really background and particulars leading to the propositions summarised in those paragraphs.  I asked him, “Do you want to say anything about that?”  He responded, “No, your Honour.”  I then asked Mr Hickey if he wanted to take some instructions about whether CPB would sign an Expert Determination Agreement with that description of the Dispute inserted.  Mr Hickey said he would like to do so. 

23. There followed some exchanges with both counsel about whether the description might extend to paragraphs 26 to 32, instead of 29 to 32. The court then adjourned at 1:05 pm for lunch and to allow the respective counsel to take instructions. 

24. When the hearing resumed at 2:35 pm, counsel informed the court that the parties had reached an agreed position.  This involved the adjournment of the application for six days – to allow the parties to execute an Expert Determination Agreement – and for them to inform my associate if such an agreement was signed.  If that occurred, as the parties then anticipated, each party wished to file written submissions on costs, to be decided on the papers. An Order containing directions to that effect was made.  

25. On 8 September 2020, the parties informed my associate that the anticipated agreement had been signed.  Written submissions were filed on 23 September 2020.  This is the decision on costs. 

    Consideration of the appropriate costs order

26. The court has a wide discretion in awarding costs.[3]  It must exercise the discretion judicially and by reference to relevant considerations.[4]  The primary purpose of any costs order is to protect a successful party from the undue depletion of its resources from the pursuit of its lawful rights or the defence of its lawful conduct. It is not to punish an unsuccessful (or insufficiently successful) party.[5] 

    [3]Uniform Civil Procedure Rules 1999 (Qld), r 681(1).

    [4]Latoudis v Casey (1990) 170 CLR 534.

    [5](1990) 170 CLR 534 at 543 (Mason CJ), 562-563 (Toohey J), 567 (McHugh J).

27. This is why costs follow the event, in the absence of some other specific consideration, such as a rejected offer to settle on terms more favourable to the offeree than those obtained.  No such other consideration arises here. 

28. Surprisingly, the parties seem to be at odds about which of them was successful in the proceeding. 

29. At the hearing, CPB relied on written submissions and oral contentions to the effect that it could refuse to sign the Expert Determination Agreement, that KDR’s application was “premature and misconceived” and that CPB’s notice of dispute about the description of the earlier Dispute was “not illegitimate or invalid”.  To the extent that it matters, each of those propositions could be accurately assessed as having no real prospect of success.

30. An affidavit by Mr Scholes, a solicitor for KDR, confirms that the parties executed an Expert Determination Agreement on 7 and 8 September 2020.  In it, the parties described the Dispute as:

    “The dispute is that summarised in paragraphs 26 to 32 of the Notice of Dispute dated 30 October 2019.”

31. Two conclusions may be drawn from this fact.  The first is that either there was no real issue of substance to CPB’s objection to the description of the Dispute proposed by KDR in December 2019 or, if there was, CPB has conceded completely to KDR’s position in that respect.  The second is that CPB’s purported notice of dispute about the description of the Dispute is of no continuing importance. 

32. Despite this development, for CPB, it was submitted that, “The applicant has not been successful on its application.” 

33. I reject that submission. 

34. KDR has obtained the object it sought – CPB’s signature on the Expert Determination Agreement with a description of the Dispute by reference to the notice of dispute – and CPB’s purported “dispute” about the description of the Dispute has vanished along with its purported notice of escalation. 

35. It is no exaggeration to observe that KDR has succeeded completely in obtaining the outcome it sought in the proceeding.  CPB did not concede its position until the hearing was substantially completed and the parties had incurred the costs of the proceeding.

    Final disposition

36. It follows that CPB should pay KDR’s costs of the proceeding to be assessed on the standard basis.  For the assistance of the person preparing any cost assessment, those costs should include the costs of the pre-proceeding correspondence passing between KDR and CPB (or their respective solicitors) from and including the letter from Mr Bryan of CPB to Mr Mackenzie of KDR to dated 9 January 2020.