Reward Interiors Pty Ltd v Master Fabrication (NSW AU) Pty Ltd (No 2)

[2022] NSWDC 541

District Court

New South Wales

Medium Neutral Citation:	Reward Interiors Pty Ltd v Master Fabrication (NSW AU) Pty Ltd (No 2) [2022] NSWDC 541
Hearing dates:	On the papers
Date of orders:	8 November 2022
Decision date:	08 November 2022
Jurisdiction:	Civil
Before:	P Taylor SC DCJ
Decision:	Reward Interiors to pay Master Fabrication the costs of Master Fabrication’s claim, and 50% of Master Fabrication’s costs of defending Reward Interiors’ claim.
Catchwords:	COSTS — party/party — general rule that costs follow the event – mixed success – offers to settle
Legislation Cited:	Uniform Civil Procedure Rules 2005, r 42.1, r 42.35
Cases Cited:	Reward Interiors Pty Ltd v Master Fabrication (NSW AU) Pty Ltd [2022] NSWDC 536
Category:	Costs
Parties:	Reward Interiors Pty Ltd (plaintiff) Master Fabrication (NSW AU) Pty Ltd (defendant)
Representation:	Solicitors: HWL Ebsworth (plaintiff) Madison Marcus Law Firm (defendant)
File Number(s):	2020/187009
Publication restriction:	None

Judgment

1. On 28 October 2022 I gave judgment in favour of Master Fabrication (NSW AU) Pty Ltd against Reward Interiors Pty Ltd in the sum of $21,753. ^[1] That sum, apart from interest, involved an agreed amount of $64,504, for which Master Fabrication had commenced Local Court proceedings, less a set-off of $44,869 for two disputed variations. The remaining dispute is the proper order for costs.

   1. Reward Interiors Pty Ltd v Master Fabrication (NSW AU) Pty Ltd [2022] NSWDC 536.

2. Master Fabrication seeks an order in its favour for the costs of the proceedings. Reward Interiors seeks an order that each party pay its own costs.

3. Reward Interiors sued for more than $600,000. Apart from the sum of approximately $5,000 for one cost saving by Master Fabrication, that claim was entirely dismissed. There was an error in the calculation by Reward Interiors that revealed that it was entitled to a credit for another disputed variation. This was a major part of the set-off.

4. In these circumstances, I indicated at the time of judgment that I was disposed to order Reward Interiors to pay the costs of Master Fabrication’s claim, and half of the costs of the primary proceedings, but that I would hear from the parties, including about whether there was any relevant offer of compromise.

5. Master Fabrications’ claim for the whole of the costs of defending Reward Interiors’ claim appears to overlook that Reward Interiors did, in those proceedings, achieve a set-off of a not insignificant sum. Its claim has had some minor success above the amount which r 42.35 of Uniform Civil Procedure Rules 2005 indicates might ordinarily not justify an order for costs. The general principle in r 42.1, that costs follow the event, does not suggest that all the costs should be paid by Reward Interiors.

6. In seeking that there be no order as to costs, Reward Interiors points to a number of matters: the refusal of Master Fabrication to attend a mediation, a period where Master Fabrication lacked legal representation; some allegedly unsatisfactory answers of Mr Patel in evidence that were said to have prolonged proceedings; Reward Interiors’ success on the two components of the set-off which remained disputed throughout the proceedings; the likely disproportionate value of the costs order compared to the amount payable to Master Fabrication; and two offers to settle the proceedings.

7. None of these items have cogency except for the set-off, which I have taken into consideration.

8. The offers of settlement by Reward Interiors proposed, in the first place, a settlement of the Local Court proceedings for a sum of about 15% of the amount subsequently agreed by Reward Interiors to be payable, with no settlement of the primary proceedings. That offer is not a matter in favour of Reward Interiors, and may, with the second offer, provide an explanation for why the mediation did not proceed, and was unlikely to have resolved the matter.

9. The second offer, made orally, proposed a payment by Master Fabrication to Reward Interiors of an amount equal to about 25% of Master Fabrication’s subsequently undisputed claim. It is hardly an improvement on the first offer. Neither offer is even close to the result obtained in the judgment.

10. The absence of legal representation at one stage of the proceedings, some less than straightforward responses in cross-examination, the failure to attend a mediation in circumstances where, from the offers, there appears to have been no prospect of settlement, all seem to have little or no significance to the question of costs.

11. The circumstance that the costs order will likely outweigh the primary judgment in favour of Master Fabrication is a matter for consideration, but it also weighs against Reward Interiors. The large bulk of the costs were concerned with two substantial claims which entirely failed: the costs were thus caused by the unmeritorious claims of Reward Interiors.

12. Overall, Master Fabrication has succeeded in the proceedings, although not for the full amount it claimed. In my view, it should be compensated to some extent for its costs. That view has not been altered by the subsequent submissions. It should receive the costs of the cross-claim, and 50% of the costs of the primary claim. This general order for costs should embrace the costs argument.

13. The order of the Court is: Reward Interiors to pay Master Fabrication the costs of Master Fabrication’s claim, and 50% of Master Fabrication’s costs of defending Reward Interiors’ claim.

**********

Endnote