Strata Plan 99960 v SPS Building Contractors Pty Ltd - [2022] NSWSC 1464

Supreme Court

New South Wales

Medium Neutral Citation: Strata Plan 99960 v SPS Building Contractors Pty Ltd [2022] NSWSC 1464
Hearing dates: 14 October 2022
Date of orders: 14 October 2022
Decision date: 14 October 2022
Jurisdiction: Equity - Technology and Construction List
Before: Rees J
Decision:
Defendant’s application for security for costs dismissed with costs.

Catchwords:
COSTS – security for costs – building and construction dispute between plaintiff owners corporation and defendant builder over alleged defects in townhouses – Court’s inherent power to order security for costs – proceedings not vexatious or oppressive – Uniform Civil Procedure Rules 2005 (NSW), rule 42.21(1)(d) – whether owners corporation unlikely to be able to meet adverse costs order – where owners corporation is well-organised and has raised special levies in connection with these proceedings – Court’s inherent and statutory powers to order security for costs not enlivened – application dismissed.

Legislation Cited:
Uniform Civil Procedure Rules 2005 (NSW), r 42.21(1)(d)

Cases Cited:
Bhagat v Murphy [2000] NSWSC 892
Logan v Bank of Scotland (No 2) [1906] 1 KB 141
McHenry v Lewis (1883) 22 Ch D 397
Morris v Hanley [2000] NSWSC 957
Owners – Strata Plan 50530 v Walter Construction Group Ltd [2001] NSWSC 820

Category: Procedural rulings
Parties: Strata Plan 99960 (Plaintiff/Respondent)
SPS Building Contractors Pty Ltd (Defendant/Applicant)
Representation:
Counsel:
Mr JJ Young / Dr A Lim (Plaintiff/Respondent)
Mr S Docker / Mr C Langford (Defendant/Applicant)
Solicitors:
OMB Solicitors (Plaintiff/Respondent)
Twomey Dispute Lawyers (Defendant/Applicant)

File Number(s): 2021/238327

EX TEMPORE Judgment

HER HONOUR: This is an application for security for costs. The defendant is the builder of a development in Tweed Heads, comprising 45 townhouses. The plaintiff is the owners corporation of the development.

FACTS

The development was completed in 2019. In March 2020, the owners corporation pursued its concerns regarding building defects by a complaint lodged with NSW Fair Trading. In July 2020, a rectification order was issued by the NSW Building Commissioner. The builder completed some repair work. The evidence varies as to whether the owners corporation permitted the builder to do as much repair work as it would have liked and whether the repair work was satisfactory.
At the time when the rectification order was issued, the owners corporation's finances were modest. As at 31 August 2020, the net assets of the owners corporation were some $27,000; it had levies in arrears of some $3,000. The owners corporation's financial position has continued to improve in the interceding years.
In January 2021, an extraordinary general meeting of the owners corporation was held. A resolution was passed to raise a special levy of $200,000 to fund building defects proceedings. The levy was raised. In August 2021, these proceedings were commenced. By then, the owners corporation's net assets had increased to $183,000, presumably by reason of the raising of the special levy. Levies in arrears had also then grown to some $29,000.
The procedural history of the matter is unremarkable. Orders were made for the owners corporation to serve its evidence,…

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: [2022] NSWSC 1464
Decision Date: 14 October 2022

CaseChat Overview and Summary

The case of Strata Plan 99960 v SPS Building Contractors Pty Ltd was heard in the Supreme Court of New South Wales. The dispute arose between the plaintiff, an owners corporation representing the owners of a number of townhouses, and the defendant, a building contractor. The plaintiff claimed that the townhouses had defects that were the fault of the defendant, and sought damages for these defects. The defendant denied liability and counterclaimed for payment of outstanding invoices.

The primary legal issue before the court was whether the Court should exercise its inherent and statutory powers to order the plaintiff to provide security for costs. The plaintiff argued that it was unlikely to be able to meet an adverse costs order, given its financial situation. However, the defendant submitted that the Court should order security for costs, as the plaintiff was well-organised and had raised special levies in connection with the proceedings. The court needed to balance these competing considerations to determine whether the inherent and statutory powers to order security for costs were enlivened.

In determining the matter, the court held that the proceedings were not vexatious or oppressive and that the plaintiff was unlikely to be able to meet an adverse costs order. However, the court also found that the plaintiff was well-organised and had raised special levies in connection with the proceedings. These factors, along with the fact that the plaintiff had already paid a significant amount towards the defendant’s costs, led the court to conclude that the inherent and statutory powers to order security for costs were not enlivened. The application for security for costs was therefore dismissed.

No further orders were made by the court.

Orders