Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd
[2012] WASCA 53 (S)
•13 MARCH 2012
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA |
| TITLE OF COURT : | THE COURT OF APPEAL (WA) | |
| CITATION | : | SPIERS EARTHWORKS PTY LTD -v- LANDTEC PROJECTS CORPORATION PTY LTD [No 2] [2012] WASCA 53 (S) |
| CORAM | : McLURE P |
NEWNES JA MURPHY JA
| HEARD | : | 5 JULY 2011 & ON THE PAPERS |
| DELIVERED | : | 13 MARCH 2012 |
| SUPPLEMENTARY | ||
| DECISION | : | 14 JUNE 2012 |
| FILE NO/S | : | CACV 67 of 2010 |
| BETWEEN | : | SPIERS EARTHWORKS PTY LTD Appellant |
| AND | ||
| LANDTEC PROJECTS CORPORATION PTY LTD Respondent | ||
| ON APPEAL FROM: | ||
| Jurisdiction | : | DISTRICT COURT OF WESTERN AUSTRALIA |
| Coram | : WAGER DCJ | ||
| Citation |
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| File No |
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| Jurisdiction |
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| Coram | : WAGER DCJ | ||
| Citation |
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| File No |
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| Catchwords: |
Costs - Building dispute - Net flow of money - Misconduct
Legislation:
Rules of the Supreme Court 1971 (WA), O 24A, O 66 r 1
Result:
Appellant awarded 85% of its costs
Category: B
[2012] WASCA 53 (S)
Representation:
Counsel:
| Appellant | : | Mr B P Wheatley |
| Respondent | : | Mr A Metaxas & Mr B G Grubb |
Solicitors:
| Appellant | : | Mossensons |
| Respondent | : | Metaxas & Hager |
Case(s) referred to in judgment(s):
Badge Constructions Pty Ltd v Penbury Coast Pty Ltd [1999] SASC 6
BMD Major Projects Pty Ltd v Victorian Urban Development Authority (No 2)
[2007] VSC 441
Capolingua v Phylum Pty Ltd (1991) 5 WAR 137
CMA Assets Pty Ltd v John Holland Pty Ltd [No 2] [2012] WASC 126
Kane Constructions Pty Ltd v Sopov (No 2) [2005] VSC 492
Keywest Construction Group Pty Ltd v Footscray Holdings Pty Ltd
(Unreported, WASC, Library No 930078, 23 February 1993)
LNC Harper Davidson Pty Ltd v Keywest Building Co Pty Ltd (Unreported,
WASC, Library No 7192, 13 July 1988)
Love v Roads Corporation [2011] VSCA 434
Miles v Palm Bridge Pty Ltd [2001] WASC 42
Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003]
WASCA 11
Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569
Rush & Tompkins Ltd v Greater London Council [1988] 3 WLR 939
Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd [2010]
WASCA 43
Trade Practices Commission v Arnotts Ltd [1989] FCA 283; (1989) 88 ALR 69
Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129
| JUDGMENT OF THE COURT | [2012] WASCA 53 (S) |
JUDGMENT OF THE COURT: These supplementary reasons deal with the costs of the appeal in this matter and the order for costs made by the trial judge with respect to the proceedings at first instance. We will adopt, in these reasons, the abbreviations used in this court's principal reasons for judgment.
The underlying dispute was in the nature of a building/construction
dispute.
3 At first instance, the developer, who was the plaintiff (the respondent
in the appeal), claimed certain moneys from the contractor, who was the defendant (the appellant in the appeal). The contractor counterclaimed. The judge, in effect, allowed part of the developer's claim and allowed part of the contractor's counterclaim. The net 'flow of money' between the two parties, on the trial judge's findings, was approximately $24,000 in favour of the developer. As to costs, the judge ordered the contractor to pay the developer's costs of the developer's claim, and ordered that there be no order for costs in respect of the contractor's counterclaim.
4 As a result of this appeal, there is a net flow of money the other way.
Excluding interest, there is now a net flow of money from the developer to the contractor of approximately $123,000. The contractor (appellant) contends, without objection from the developer (respondent), that as a consequence, the contractor is to be regarded as the successful party at first instance, and in the appeal, within the meaning of O 66 r 1 of the Rules of the Supreme Court 1971 (WA). In that regard, the parties referred to Badge Constructions Pty Ltd v Penbury Coast Pty Ltd [1999] SASC 6 [12]; Keywest Construction Group Pty Ltd v Footscray Holdings Pty Ltd (Unreported, WASC, Library No 930078, 23 February 1993) (Anderson J); BMD Major Projects Pty Ltd v Victorian Urban Development Authority (No 2) [2007] VSC 441 [8] - [10]. See also Miles v Palm Bridge Pty Ltd [2001] WASC 42 [51]; LNC Harper Davidson Pty Ltd v Keywest Building Co Pty Ltd (Unreported, WASC, Library No 7192, 13 July 1988) (Kennedy J); Kane Constructions Pty Ltd v Sopov (No 2) [2005] VSC 492 [64] - [66] (Warren CJ).
5 The developer contends, however, that even though the contractor is
to be regarded as the successful party, there exist grounds upon which it is appropriate, in the particular circumstances of this case, to deprive the contractor of its costs. In substance, two grounds are alleged. One is that the contractor had misconducted the proceedings at trial and in the appeal. The other is that the contractor had unreasonably rejected a settlement offer on the morning of the first day of the trial.
| JUDGMENT OF THE COURT | [2012] WASCA 53 (S) |
6 With respect to the alleged misconduct, the developer relies upon
two authorities - Capolingua v Phylum Pty Ltd (1991) 5 WAR 137 and Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129 at 156. In Capolingua v Phylum, the successful defendants were deprived of their costs and it was held that justice required that there be no order as to costs. In that case, there were deficiencies in the defendants' pleading. Those deficiencies, combined with the conduct of the defendants' solicitors at a mediation conference, and the defendants' failure to comply with pre-trial orders, served to obscure the real issues at trial. This caused unnecessary evidence to be led, and caused the opportunity to dispose of the matter expeditiously by way of a preliminary issue to be lost. In Verna Trading v New India Assurance Co the successful defendant, an insurer, was ordered to pay the plaintiff's (the insured's) costs on a solicitor/client basis up to the first day of the trial. The defendant insurer had, following receipt of the plaintiff's claim under the policy, given no indication as to why it denied liability; it had failed in its pleadings to admit facts which were within its knowledge; it had asserted defences which were later abandoned at trial; and in the early part of the trial it raised for the first time defences upon which it ultimately succeeded.
7 In the present case, the alleged misconduct referred to by the
developer in and in relation to the trial is said to be constituted or
evidenced by the following:
(a)
the late discovery of certain documents, the failure to produce papers for the judge as directed, and the late production of documents on the first day of the trial, resulting in the developer not opening its case until late on the first day of the trial;
(b)
delays caused on the second day of the trial by the contractor seeking to amend its reply to the defence to counterclaim and in not consenting to the tender of the developer's trial bundle;
(c)
the contractor's application to amend its pleadings on days four and five of the trial, with consequent delays;
(d)
the contractor's abandonment of its original formulation of its counterclaim, and the reformulation of its counterclaim in the course of evidence given on the last day of the eight-day trial; and
(e)
the contractor's application, after the close of its case, to amend its counterclaim to accord with the evidence led on the last day of the trial, the subsequent appeal to this court of the judge's decision to
| JUDGMENT OF THE COURT | [2012] WASCA 53 (S) |
refuse that application, and the delays associated with the
contractor's application to amend and for leave to appeal.
8 These last two matters require some explanation. The contractor had
pleaded and opened its case on the counterclaim on the basis that the contractor was owed by the developer $284,088.24 in respect of certain invoices. The claim included amounts allegedly due under the following invoices:
31 October 2005 $30,360 30 November 2005 $160,531.80 11 February 2006 $84,929.39
9 On the last day of the trial, the contractor, through its principal
witness on this issue, in effect, abandoned that formulation of its counterclaim and contended that it was owed $260,137.65, as formulated in a document tendered through the contractor's witness and marked exhibit 4.1.
10 The first item in exhibit 4.1 was for $120,842.85. This item, in
effect, adopted a figure from a spreadsheet which had been prepared by the developer, recording amounts claimed by the contractor, certified by the superintendent, and paid by the developer, leaving a balance of $120,842.85. The contractor's evidence was to the effect that the sum of $120,842.85 was due and, in addition, that seven other items totalling $139,294.80 were outstanding, yielding the total claim of $260,137.65.
11 After the contractor had closed its case, and in the course of final
submissions, the contractor applied to the judge to amend its pleading to make it accord with the counterclaim as formulated in exhibit 4.1. The contractor's application (heard on 9 July 2009) was dismissed, with costs. The contractor then sought leave to appeal that interlocutory decision. This court dismissed the contractor's application for leave, with costs: Spiers Earthworks Pty Ltd v Landtec Projects Corporation Pty Ltd [2010] WASCA 43. The contractor's application to amend after the close of its case, and the unsuccessful application for leave to appeal to this court, resulted in considerable delay in the determination of the case at first instance by the trial judge.
12 Although her Honour had dismissed the application to amend, she
nevertheless, in her reasons, regarded the contractor's evidence, and the
| JUDGMENT OF THE COURT | [2012] WASCA 53 (S) |
formulation of the counterclaim in exhibit 4.1, as a proper basis upon which to determine the counterclaim, having regard to the conduct of the trial and notwithstanding the absence of a formal amendment to the pleadings. (It is not clear why the amendment was refused if the course of the trial would in any event, sustain findings based on a reformulation of the counterclaim in exhibit 4.1).
13 In her reasons for judgment, the judge allowed the claim for
$120,842.85, based on the developer's spreadsheet as, in effect, certified but unpaid sums due to the contractor. She also allowed one of the seven other items - a claim for $10,862 - but dismissed the remaining six items (reasons [210] - [216]). In the appeal to this court, the contractor challenged five of these six items which the judge had disallowed. One challenge (ground 13) succeeded in the sum of $36,300. The other challenges (grounds 11, 12, 14 and 15) were dismissed.
14 With that background in mind, we turn to the alleged misconduct
relied upon by the developer, referred to in [7] above. The matters referred to in subpar (a) of [7] above were productive of considerable delay. Those matters, together with the amendment applications referred to in subpar (c) of [7] above, effectively resulted in the loss of a period of time equivalent to one day of the eight day trial. In relation to the matters referred to in subpar (b) of [7] above, both parties applied to amend on the second day of the trial, not just the contractor. Also, the dispute as to the tender bundle cannot be characterised as misconduct. The matters referred to in subpar (b) of [7] above do not influence the question of costs.
15 In relation to the matters referred to in subpars (d) and (e) of [7]
above, the following observations are relevant. Had the reformulated counterclaim been the subject of a formal amendment to the pleading, leave to amend would almost certainly have been on terms that the contractor pay the costs of the application and costs thrown away by the amendment. The judge, in dismissing the application for leave to amend, awarded the costs of the application against the contractor. In substantive terms, however, effect was given to the reformulated counterclaim in the judge's final reasons, but without the contractor having been required to pay costs thrown away. The contractor ought not, in these circumstances, be in a better position on costs for having failed in its application to amend.
16 The effective waste of a day of the trial referred to earlier, and the
costs unnecessarily incurred in relation to the counterclaim as originally
| JUDGMENT OF THE COURT | [2012] WASCA 53 (S) |
formulated, should both be taken into account in an assessment of a just award of costs. They are not sufficient, however, to warrant denying the contractor all, or even substantially all, of its costs in the proceedings below. The contractor was, fundamentally, the successful party and any costs order must give proper recognition to that consideration. The delay resulting from the failed application to amend and for leave to appeal has not resulted in any relevant prejudice because each party has been awarded interest from the inception of its causes of action. Taking a broad view, and subject to the question referred to below, an appropriate order would be that the contractor be paid 85% of its costs of the proceedings at first instance.
17 There remains for consideration the question of whether the
contractor should be deprived of its costs on account of its failure to accept an offer of settlement on the first day of the trial. In relation to that matter, the developer relies upon an affidavit of Mr A Palermo, sworn 27 May 2010. The affidavit contains evidence of settlement discussions which, although not expressly made without prejudice, were evidently of that character and should be treated as without prejudice: Old Papa's Franchise Systems Pty Ltd v Camisa Nominees Pty Ltd [2003] WASCA 11 [91]; Trade Practices Commission v Arnotts Ltd [1989] FCA 283; (1989) 88 ALR 69; Rush & Tompkins Ltd v Greater London Council [1988] 3 WLR 939, 942 - 943. The affidavit does not purport to provide evidence of a Calderbank offer - ie an offer which is expressed to be without prejudice save as to costs and which indicates that the offer will be adduced in evidence on the question of costs: see Love v Roads Corporation [2011] VSCA 434 [183]. Nor was any offer of compromise made in accordance with O 24A of the Rules of the Supreme Court. Mr Palermo's affidavit is inadmissible in these circumstances and cannot be used on the question of costs: Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569, 576 - 577; CMA Assets Pty Ltd v John Holland Pty Ltd [No 2] [2012] WASC 126 [15].
18 For the foregoing reasons, there should be an order that the developer
pay 85% of the contractor's costs of the action before Wager DCJ
(including the developer's claim and the contractor's counterclaim).
We now turn to the costs of the appeal.
20 The developer contends that the appeal was marked by a failure by
the contractor properly to elucidate and address the real issues in the appeal and that, as a result, further written submissions were required of the parties before the court could proceed to a determination of the appeal.
| JUDGMENT OF THE COURT | [2012] WASCA 53 (S) |
There is some force in this contention, although the failure was not confined to the contractor - see this court's principal reasons for judgment at [2]. To the extent that the contractor contributed to this failure, it is insufficient to deprive it of all, or substantially all, of its costs. Again, taking a broad view, an appropriate order would be that the contractor be paid 85% of the costs of the appeal (including the cross-appeal and the notice of contention).
The formal orders should be:
(1) Ground 17 of the appeal be and is hereby allowed. (2) Paragraphs 8 and 9 of the orders of Wager DCJ dated 9 June 2010 be set aside and in lieu thereof it be and is hereby ordered that the plaintiff pay the defendant 85% of the defendant's costs of the action (including in relation to the plaintiff's claim and the defendant's counterclaim), including any reserved costs, to be taxed. (3) The respondent pay the appellant 85% of the appellant's costs of the appeal (including the notice of contention and the cross-appeal), including any reserved costs, to be taxed.
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12
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