Maroo Build Pty Ltd v CPB Contractors Pty Ltd

[2024] NSWSC 660

Supreme Court

New South Wales

Medium Neutral Citation:

Maroo Build Pty Ltd v CPB Contractors Pty Ltd [2024] NSWSC 660

Hearing dates:

24 May 2024

Decision date:

24 May 2024

Jurisdiction:

Equity - Technology and Construction List

Before:

Stevenson J

Decision:

Plaintiff to provide security for costs in the sum of $400,000

Catchwords:

COSTS – security for costs – quantum and order

Legislation Cited:

Corporations Act 2001 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Carrano Investments Holding Pty Ltd v Siennamia Investments Pty Ltd [2022] NSWCA 262

Live Board Holdings v Cody Live Pty Ltd [2017] NSWCA 302

Category:

Procedural rulings

Parties:

Maroo Build Pty Limited (Plaintiff/Respondent)
CPB Contractors Pty Limited (Defendant/Applicant)

Representation:

Counsel:
W K Soon (Plaintiff/Respondent)
R Thrift (Defendant/Applicant)

Solicitors:
Addisons (Plaintiff/Respondent)
HWL Ebsworth Lawyers (Defendant/Applicant)

File Number(s):

2023/455679

EX TEMPORE JUDGMENT (REVISED)

1. The defendant, CPB Contractors Pty Ltd, was engaged by Sydney Metro to perform works on the Sydney Metro project.

2. By contract dated 22 May 2021, CPB engaged the plaintiff, Maroo Build Pty Ltd, an Indigenous owned and operated company, to provide hoist and associated services in relation to that project.

3. Disputes arose and, on 15 December 2023, Maroo commenced these proceedings seeking:

1. an order that CPB pay it damages in respect of the “Omitted Hoist Claim” in the sum of some $980,000;

2. an order for payment of the “Engineering Work” in the sum of some $31,500;

3. an order for payment of the “Additional Rent” of some $840,000; and

4. an order for payment of additional costs and charges in relation to the “Holding Claim” in the sum of $165,000.

4. The proceedings have reached the stage where CPB has filed its List Response.

5. Now, by notice of motion filed on 19 April 2024, CPB seek an order that Maroo provides security for costs in the sum of some $580,000.

6. There is a dispute as to what a reasonable figure for security would be, were security to be ordered, and it is convenient to deal with that question first. As is customary in these types of applications, the solicitors for either side have prepared an estimate as to CPB’s likely recoverable costs were the proceedings to continue to trial. Each of the solicitors, Mr Jury for CPB and Mr Clements for Maroo, agree that a three-day hearing is likely to be required.

7. There is an issue between the solicitors as to whether CPB’s costs to date should be included. As CPB had made its application for security promptly on closing of pleadings, there is no reason why costs to date should not be included.

8. Ms Thrift, who appears for CPB, has prepared a table setting out the competing opinions of Mr Jury and Mr Clements about CPB’s likely costs of the proceedings. Taking the middle ground between those estimates on a line by line basis, the median figure of recoverable costs is in the range of some $334,000 to $356,000 for profit cost and some $63,000 for disbursements; a total in the range of some $400,000 to $420,000.

9. It is necessary that I take a reasonable broad brush view about what the recoverable costs are likely to be, bearing in mind that the parties can always come back to Court to seek a revision of the quantum of security ordered if circumstances require that to be done. My conclusion is that, assuming security should be ordered, the appropriate figure is $400,000.

10. As to whether there is reason to believe that Maroo could not pay those costs,^[1] the only evidence as to Maroo’s financial position is that annexed to an affidavit sworn by one of its directors, Mr Mark Coleman.

    1. Uniform Civil Procedure Rules 2005 (NSW) r 42.21(1)(d); Corporations Act 2001 (NSW), s 1335(1).

11. That material comprises Maroo’s profit and loss account for the six months to 31 December 2023 and its balance sheet as at 19 February 2024. Those documents appear to be management accounts.

12. The profit and loss statement shows a gross profit for the six months to 31 December 2023 in the order of $360,000, with a net profit a little over $54,000. As Ms Thrift pointed out, one of the operating expenses shown in the profit and loss account is legal expenses of $650. That relatively low figure may be explained by reason of the fact that these proceedings were commenced in December 2023, shortly before the end of the six-month period the subject of the profit and loss account.

13. It is obvious that Maroo’s profit and loss account for the six months to 30 June 2023, assuming other cost and expenses were equal, will reflect the legal cost that it will inevitably incur in the proceedings; leading to the distinct possibility that the profit and loss account will not show any profit at all.

14. The balance sheet shows that Maroo has no hard assets and no real estate. There was cash at bank a little over $29,000. Otherwise, its current assets comprise accounts receivable of some $80,000, and loans from its directors in the order of $191,000. There is no evidence before me as to what value, if any, those assets have.

15. In those circumstances, I am comfortably satisfied that there is reason to believe that, were CPB to obtain a costs order at the end of the day against Maroo, Maroo would not be able to pay that costs order.

16. As to the discretionary matters, CPB accepts that the question of Maroo’s prospects in the proceedings is a neutral factor. That is, as I understand it, CPB accepts that Maroo’s case is at least arguable and not bound to fail.

17. Mr Soon, who appeared for Maroo, suggested, albeit somewhat faintly, that Maroo’s financial position is attributable to the conduct of CPB of which it complains in the proceedings.

18. It may be accepted that it is implicit in the nature of the claim that Maroo makes in the proceedings that it contends its financial position would be better if its claims are vindicated. But there is no evidence that its current financial position is attributable to CPB’s conduct. In particular, Mr Coleman does not say so.

19. Mr Soon also submitted that an order for security would stultify the proceedings.

20. It is well established that a party contending that a provision of security will stultify proceedings must provide evidence to enable the Court to evaluate the extent to which it, and those standing behind it, could reasonably be expected to make funds available to satisfy any order for security which is made. ^[2]

    2. See Live Board Holdings v Cody Live Pty Ltd [2017] NSWCA 302 at [92] and [96] (Bathurst CJ, Leeming JA and Barrett AJA); Carrano Investments Holding Pty Ltd v Siennamia Investments Pty Ltd [2022] NSWCA 262 at [13] (Gleeson JA, Basten and Griffiths AJJA agreeing).

21. There was no such evidence.

22. Nor is there evidence that Mr Coleman and any other individual standing behind Maroo are prepared to undertake themselves to pay any costs ordered against Maroo.

23. Mr Soon also submitted that, because the proceedings relate to the supply of services to an entity performing work for a government business enterprise, and because CPB is an indigenous owned and operated company, the proceedings might be seen as relating to a matter of public importance or raising a matter of public importance.

24. Although those factors are undoubtedly at play, the proceedings are, as Mr Soon candidly accepted, “ultimately, a commercial dispute between corporations”.

25. My conclusion is that, in those circumstances, I should order that Maroo provide security for CPB’s costs in the proceedings in the sum of $400,000.

26. During the argument before me, there was discussion about whether security should be ordered in tranches. The parties are to provide submissions on this point.

27. The parties should confer and agree on the directions necessary to give effect to these reasons.

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Endnotes

Decision last updated: 29 May 2024