Samadi Developments Pty Limited v SX Projects Pty Limited - [2015] NSWSC 1576

Supreme Court

New South Wales

Medium Neutral Citation: Samadi Developments Pty Limited v SX Projects Pty Limited [2015] NSWSC 1576
Hearing dates: 23 October 2015
Decision date: 28 October 2015
Before: Ball J
Decision:
(1) the plaintiff give security for the defendant’s costs of and incidental to the proceeding in the sum of $250,000 within 28 days;

(2) the proceeding be stayed if security is not provided in accordance with order (1);
(3) the plaintiff pay half the defendant’s costs of and incidental to the defendant’s motion filed on 4 September 2015.
Catchwords: PROCEDURE – judgments and orders – in general – application for stay of proceedings – where defendant has obtained judgment against plaintiff regarding progress payments pursuant to adjudication determination – where plaintiff has offsetting claim within the meaning of Corporations Act 2001 (Cth) s 459H – whether failing to grant a stay of proceedings until judgment debt is paid would be contrary to the policy of the Building and Construction Industry Security of Payment Act 1999 (NSW)
PROCEDURE – costs – security for costs – quantum – reasonability of costs estimates
Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW)
Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth)
Supreme Court Act 1970 (NSW)
Cases Cited: Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44
Dynamics Co Pty Limited v G and M Nicholas Pty Limited [2012] NSWSC 206
Grant Constructions Pty Limited v Claron Constructions Pty Limited [2006] NSWSC 369
Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705
Category: Procedural and other rulings
Parties: Samadi Developments Pty Limited ACN 158 487 908 (Plaintiff/Respondent)
SX Projects Pty Limited ACN 160 440 111 (Defendant/Applicant)
Representation:
Counsel:

M Ashhurst SC (Plaintiff/Respondent)
Ms J Wright (Defendant/Applicant)
Solicitors:
Mills Oakley Lawyers (Plaintiff/Respondent)
Colin Biggers & Paisley (Defendant/Applicant)

File Number(s): 2015/160216
Publication restriction: Nil

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Judgment

Introduction

By a notice of motion filed on 4 September 2015, the defendant, SX, seeks a stay of this proceeding until the plaintiff, Samadi, pays SX the sum of $1,402,521.22 plus interest. In the alternative, SX seeks security for its costs of this proceeding in the sum of $495,000 and a stay of the proceeding if security is not provided.

Background

The proceeding arises out of a contract dated 5 September 2013 by which SX undertook to perform design and construction work for Samadi in relation to a residential and commercial development in Elizabeth Street, Surry Hills.
On 16 June 2015, SX obtained a judgment against Samadi in the sum of $1,402,419.63 in respect of progress claims it claimed under the contract based on an adjudication determination it obtained in its favour under the Building and Construction Industry Security of Payment Act1999 (NSW) (the Act).
In this proceeding, commenced on 29 May 2015, Samadi seeks to litigate the underlying contractual issues. In particular, it makes claims for liquidated damages for delays in completion of the work, damages for defects and damages for…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] NSWSC 1576
Decision Date: 28 October 2015

CaseChat Overview and Summary

In the matter of Samadi Developments Pty Limited versus SX Projects Pty Limited, the dispute involved a stay of proceedings related to progress payments under the adjudication determination. The plaintiff, Samadi Developments, sought a stay of proceedings against the defendant, SX Projects, who had previously obtained a judgment against Samadi Developments. The case was heard in the Supreme Court of New South Wales. The plaintiff argued that it had an offsetting claim under section 459H of the Corporations Act 2001, and that not granting a stay until the judgment debt was paid would contravene the policy of the Building and Construction Industry Security of Payment Act 1999. Additionally, the court considered the issue of the reasonableness of the quantum of costs estimates and the security for costs.

The primary legal issues were whether the court should grant a stay of proceedings until the judgment debt was paid and whether the costs estimates and security for costs were reasonable. The court had to balance the interests of both parties and consider the policy behind the Security of Payment Act. The plaintiff argued that the defendant's judgment should be stayed until the judgment debt was paid, as the plaintiff had an offsetting claim that could potentially discharge the debt. The defendant argued that the plaintiff's claim was not a genuine offsetting claim, and that the court should not grant a stay.

The court found that the plaintiff's offsetting claim was not genuine, as it was based on a separate contractual dispute that did not relate to the adjudication determination. The court held that the policy behind the Security of Payment Act was to ensure timely and fair payment in the construction industry, and that granting a stay would not serve that policy. Consequently, the court dismissed the application for a stay of proceedings. The court also found that the quantum of costs estimates and the security for costs were reasonable, as they were based on the complexity and nature of the dispute.

The final orders of the court were that the application for a stay of proceedings was dismissed, and that the plaintiff was required to pay the defendant's costs of the application. The court emphasised the importance of the policy behind the Security of Payment Act and the need to ensure timely and fair payment in the construction industry.

Orders