Milhem v Sam's Carpentry Pty Ltd (in liquidation) & IC Formwork Services Pty Ltd (No 2)

[2023] ACTSC 61

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Milhem v Sam’s Carpentry Pty Ltd (in liquidation) & IC Formwork Services Pty Ltd (No 2)

Citation:

[2023] ACTSC 61

Hearing Date:

17 March 2023

DecisionDate:

24 March 2023

Before:

Baker J

Decision:

The second defendant is to pay the plaintiff’s costs of and incidental to the application of 27 February 2023.

This order does not include the cost of obtaining a report in response to Dr McIntosh. The costs of obtaining that report will be costs in the cause.

Catchwords:

COSTS – late service of expert report by defendant – r 1205 Court Procedures Rules 2006 (ACT) – plaintiff incurred costs in obtaining report in response – preliminary view of costs expressed – request made for alternative orders – failure to provide alternative orders – request for extension of time to provide alternative orders

Legislation Cited:

Court Procedures Rules 2006 (ACT)

Cases Cited:

Golski v Kirk (1987) 14 FCR 143

Kone Elevators Pty Ltd v Shipton [2021] ACTCA 33

Latoudis v Casey [1990] HCA 59; 170 CLR 534

Milhem v Sam’s Carpentry Pty Ltd (in liquidation) & IC Formwork Services Pty Ltd [2023] ACTSC 51 

Theodorelos v Nexus Projects Pty Ltd [2009] ACTSC 149

Parties:

Ali Milhem ( Plaintiff)

Sam’s Carpentry Pty Ltd (in liquidation) ( First Defendant)

IC Formwork Services Pty Ltd (Second Defendant)

Representation:

Counsel

A Muller ( Plaintiff)

K Martin ( First Defendant)

S Gaussen (Second Defendant)

Solicitors

United Legal ( Plaintiff)

Moray & Agnew ( First Defendant)

Hall & Wilcox (Second Defendant)

File Number

SC 353 of 2020

BAKER J:

Introduction

1. By application dated 28 February 2023, the second defendant moved under r 1205 of the Court Procedures Rules2006 (ACT) to vary a direction made by McCallum CJ to permit the late service of an expert report of Dr Andrew McIntosh, dated 14 February 2023. I heard this application as duty judge on 17 March 2023.

1. In a judgment delivered on Monday 20 March 2023 I made the following orders:

1. Extend the time for service of the expert report of Dr McIntosh dated 14 February 2023 to 20 February 2023.

2. I grant parties liberty to apply on 24 hours’ notice for any further direction arising from these orders.

See: Milhem v Sam’s Carpentry Pty Ltd (in liquidation) & IC Formwork Services Pty Ltd [2023] ACTSC 51 (“Milhem (No 1)”) at [50].

1. At the time of making these orders, I indicated to the parties that I was of the preliminary view that the second defendant should pay the costs of the plaintiff of the application. I directed the parties to notify my chambers by 5:00pm on 20 March 2023 if any alternative order was sought by any party.

1. At 11:00am on 21 March 2023, my associate wrote to the parties, noting as that no application had been made for an alternative costs order, an order would be made in chambers that the second defendant pay the plaintiff’s costs of the application.

1. At 11:21am, my associate received an email from the second defendant seeking an extension of time to 5:00pm 24 March 2023 “in order for [their] client to consider its position”. The second defendant did not provide any explanation as to why such leave was not sought prior to 5:00pm on 20 March 2023. I granted the second defendant that leave and ordered an extension of time until 5:00pm on Wednesday 22 March 2023.

1. On 22 March 2023, submissions on costs were received by email from the second defendant and the plaintiff. Neither party sought an oral hearing on this issue.

Submissions

The plaintiff’s position

1. The plaintiff submits that the second defendant should pay the plaintiff’s costs of and incidental to the application in proceedings filed by the second defendant on 27 February 2023, including the costs of obtaining a report in response to the report of Dr McIntosh.

1. The plaintiff notes that the second defendant sought, and was granted, permission to serve the report of Dr McIntosh late. Additionally, the plaintiff has now incurred costs of obtaining a report in response to Dr McIntosh that “he would not have incurred if the second defendant had not sought the Court’s indulgence to serve a late report.” The plaintiff submits that the plaintiff should not be penalised with further costs that he now has to incur owing to the service of Dr McIntosh’s’ report.

The second defendant’s position

1. The second defendant submits that the plaintiff should pay the costs of and incidental to the application.

1. The second defendant submits that the application was “necessitated by the fact the plaintiff did not consent to the service of the report of Dr McIntosh.” In particular, the second defendant submits that, owing to the plaintiff’s refusal to consent to its application for service of Dr McIntosh’s report, it was obliged to file the application and engage counsel to argue that application. As the application was granted, the second defendant submits that costs should “follow the event”.

1. In the alternative, the second defendant submits that an order should be made for costs to be in the cause.

Determination

1. As the second defendant submitted, the ‘ordinary rule’ is that costs follow the event: Kone Elevators Pty Ltd v Shipton [2021] ACTCA 33 at [294]. This is because it is “just and reasonable that the party who has caused the party to incur the costs of litigation should reimburse that party for the liability incurred”: Latoudis v Casey [1990] HCA 59; 170 CLR 534 at [86] (McHugh J).

1. However, costs are discretionary, and a party seeking a dispensation or indulgence of the Court will normally be ordered to pay costs, even if relief is granted over the other party’s opposition: Golski v Kirk (1987) 14 FCR 143 at 157; Theodorelos v Nexus Projects Pty Ltd [2009] ACTSC 149 at [32] (Refshauge J).

1. The second defendant’s application for leave to extend the time for filing Dr McIntosh’s report was filed in the context of lengthy and serious defaults of Court orders. In particular, the second defendant:

(i)       Did not make any attempt to obtain an expert report on liability for until June 2022 (almost two years after the plaintiff had commenced the proceedings in October 2020);

(ii)      Made a considered and deliberate decision not to obtain an expert report in June 2022;

(iii)     Informed the Court that the matter was ready for hearing in September 2022, and accepted a hearing date in April 2023;

(iv)     Changed its forensic decision and decided to obtain an expert report in October 2022 after receiving the advice of senior counsel (that senior counsel having only been briefed in September 2022);

(v)      Did not inform the plaintiff or the Court of its change in position when it decided to obtain an expert report on liability; and

(vi)     First informed the plaintiff of its changed position when it served the expert report on the plaintiff on 20 February 2023.

1. In view of these defaults, the application should not be seen as being “necessitated by the fact the plaintiff did not consent to the service of the report of Dr McIntosh” as submitted by the second defendant. Rather, the application was necessitated by the failure of the second defendant to comply with the Court’s orders, or to promptly advise the plaintiff or the Court when it decided to brief an expert after the time for serving expert reports had passed. Accordingly, the appropriate order is for the second defendant to pay the plaintiff’s costs of and incidental to the application.

1. The plaintiff submitted that this order should extend to the costs of obtaining an expert report in response to Dr McIntosh’s report.

1. I do not agree that the costs order should encompass the obtaining of that report. The defaults of the second defendant relate to its failure to promptly obtain Dr McIntosh’s report or to notify the plaintiff or the Court at any earlier point in time. The default was not in the obtaining of the report per se. If the second defendant had acted properly and promptly, the plaintiff would still be in a position where it was necessary to obtain a further expert report. Accordingly, I decline the plaintiff’s application for the costs order to extend to the costs of obtaining a report in response to Dr McIntosh. 

Orders

1. The second defendant is to pay the plaintiff’s costs of and incidental to the application of 27 February 2023.

1. This order does not include the cost of obtaining a report in response to Dr McIntosh. The costs of obtaining that report will be costs in the cause.

I certify that the preceding nineteen [19] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Baker

Associate:  

Date: 23 March 2023

Amendments

24 March 2023           Replace “first defendant” with “second defendant”         Paragraphs: [12]