The Owners - Strata Plan 82089 v Omaya Holdings Pty Ltd (No 4)

[2025] NSWSC 111

Supreme Court

New South Wales

Medium Neutral Citation:

The Owners - Strata Plan 82089 v Omaya Holdings Pty Ltd (No 4) [2025] NSWSC 111

Hearing dates:

On the papers; written submissions 24 January and 24 February 2025

Date of orders:

26 February 2025

Decision date:

26 February 2025

Jurisdiction:

Equity - Technology and Construction List

Before:

Stevenson J

Decision:

Parties to pay defendants’ costs in relation to the claims arising out of the “Effective Height” issue, the claims against the third and sixth defendants in relation to the Effective Height Issue, and the claim arising out of the “Fire Safety Defects” issue; third and sixth defendants entitled to costs on an indemnity basis after date of offer of compromise

Catchwords:

COSTS – party/party – general rule that costs follow event – multiple discrete issues – whether decision on costs should be deferred pending reference of remaining issues

COSTS – party/party – bases of quantification – indemnity basis – where offer of compromise made before hearing – defendants entitled to indemnity costs thereafter

Legislation Cited:

Home Building Act 1989 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

The Owners - Strata Plan 82089 v Omaya Holdings Pty Ltd (No 3) [2024] NSWSC 1511

Category:

Costs

Parties:

The Owners - Strata Plan 82089 (Plaintiff)
Omaya Holdings Pty Ltd (First Defendant)
Arinson Pty Limited (Second Defendant)
Omaya Investments Pty Ltd (Third Defendant)
BSM Holdings Pty Limited (Sixth Defendant)

Representation:

Counsel:
F Corsaro SC / D Byrne (First to Third & Sixth Defendants)

Solicitors:
Sparke Helmore (Plaintiff)
Norton Rose Fulbright (First to Third & Sixth Defendants)

File Number(s):

2018/190513

JUDGMENT

1. I published my principal judgment in this matter on 3 December 2024. ^[1]

   1. The Owners - Strata Plan 82089 v Omaya Holdings Pty Ltd (No 3) [2024] NSWSC 1511.

2. The background is set out in that judgment. I shall use the same abbreviations here.

3. Four issues were agitated before me:

1. the claim in relation to fire safety defects arising out of the “Effective Height” issue;

2. the Owners Corporation’s claims against Omaya Investments and BSM Holdings in relation to the Effective Height issue;

3. the claim in relation to fire safety defects other than the Effective Height issue, the “Fire Safety Defects” issue; and

4. the “General Building Defects” issue.

4. I determined each of issues in [3(a)], [3(b)], and [3(c)].

5. The parties agreed that the General Building Defects issue be referred out. Indeed, that issue had earlier been referred out but the relevant referee proved no longer to be available. That current referee is due to report by 13 June 2025.

6. The Owners Corporation’s primary submission was that I should make no decision, now, as to costs and to defer consideration of costs until the referee delivers his report concerning the General Building Defects.

7. I am not persuaded to take this course. The four issues I have set out at [3] above are quite distinct and costs are apt to be determined separately in relation to each issue. The costs of the reference can follow the event of the reference.

The Effective Height Issue

8. The Effective Height issue was the main focus of the hearing before me.

9. The Builder and the Developer were successful on this issue. I see no reason why they should not have their costs.

The claim against Omaya Investments and BSM Holdings

10. The Owners Corporation’s claim against Omaya Investments and BSM Holdings was predicated on the Owners Corporation achieving success in relation to the Effective Height issue. As it failed on that issue, its claims against Omaya Investments and BSM Holdings necessarily failed.

11. For the reasons set out in detail in respect of the primary judgment,^[2] the Owners Corporation against Omaya Investments would have failed in any event.

    2. See [113]-[177].

12. The Owners Corporation accepted that, as it had failed against Omaya Investments and BSM Holdings, the prima facie position was that it should pay the costs of those parties.

13. The Owners Corporation submitted that that prima facie position should not be adopted because:

1. Omaya Investments and BSM Holdings are related companies to the Builder and the Developer and had the same representation, such that their likely additional costs were “zero or negligible”;

2. the defendants had received a significant sum as a result of settlements with the Architect and Certifier;

3. the Owners Corporation’s claim in respect of the Effective Height issue was “reasonably brought” because it was relying on the advice of “a leading expert in Australia on fire safety”; and

4. the claim against BSM Holdings was not “the focus of the hearing” before me.

14. None of these reasons provides a basis to not order that the Owners Corporation pay the costs of Omaya Investments and BSM Holdings. If the costs incurred by those parties is “zero or negligible”, that will no doubt be reflected when those cost are assessed. The settlements with the Architect and the Certifier are irrelevant, as is the asserted fact that the Effective Height claim was “reasonably brought”.

15. Alternatively, the Owners Corporation sought this costs order against Omaya Investments and BSM Holdings:

“(i)   The [Owners Corporation] pay the costs of the Proceedings of [Omaya Investments] on a party/party basis, respectively proportioned to:

(A)   16.67% of the total costs incurred by all of the Defendants up to 8 July 2024; and

(B)   12.5% of the total costs incurred by all of the Defendants from 9 July 2024 to the date of the Judgment.

(ii)   The [Owners Corporation] pay the costs of the Proceedings of [BSM Holdings] on a party/party basis, respectively proportioned to 12.5% of the total costs incurred by all of the Defendants from 9 July 2024.”

16. The rationale behind that proposal was said to be:

“The [Owners Corporation] submits that the quantum of the [Owner’s Corporation’s] claim against [Omaya Investment] and [BSM Holdings], which was limited to a claim for the effective height defect, is about half of its overall claim in the proceeding. Relevantly in this regard, the Supplementary Quantum Report dated 31 July 2024 on which the Plaintiff relied at the hearing before Stevenson J in November 2024 reflects that:

(i)   the quantum of the [Owners Corporation’s] for general building defects and the non-effective height defects is worth $2,836,287.17 excluding GST (noting that the [Owners Corporation] has served other evidence in respect [of] the costs of rectifying the alleged general building defects); and

(ii)   the quantum of the [Owners Corporation’s] for the effective height defect was worth $3,242,558.39 excluding GST.

If the effective height defect accounts for about 50% of the [Owners Corporation’s] claim in the Proceedings, then:

(i)   [Omaya Investments] may only be entitled to a third of the Defendants’ overall costs before 9 July 2024 given that it was one of three defendants in that period. A third of 50% is 16.67%.

(ii)   [Omaya Investments] and [BSM Holdings] may each only be entitled to a quarter of the Defendants’ overall costs from 9 July 2024 given that they were each one of four defendants in that period. A quarter of 50% is 12.5%.”

17. I see no reason to make such a complicated order.

18. The quantum of the costs incurred by Omaya Investments and BSM Holdings, as opposed to those incurred by the Builder and the Developer, are matters that can be dealt with within the assessment process.

19. Omaya Investments and BSM Holdings sought an order that the Owners Corporation pay their costs on an indemnity basis from 25 September 2024, based upon an offer of compromise expressed to be made pursuant to Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), r 20.26. The offer was that the proceedings be dismissed as against Omaya Investments and BSM Holdings on the basis of each party paying their own costs.

20. The Owners Corporation submitted that this was in effect an offer that the Owners Corporation capitulate.

21. But the Owners Corporation did not submit that the offer was not properly made under UCPR r 20.26. It follows that, as Omaya Investments and BSM Holdings have obtained a result “no less favourable” than the offer,^[3] they are entitled to indemnity costs thereafter. ^[4]

    3. UCPR, r 42.15A(1).

    4. UCPR, r 42.15A(2).

The Fire Safety Defects Claim

22. As I recorded in the primary judgment,^[5] there was no dispute before me that the Builder and the Developer were liable to rectify those defects by reason of the warranties under the Home Building Act 1989 (NSW), and that the cost of rectification was $298,462.39.

    5. At [10].

23. The Builder and the Developer led no evidence in respect of these defects.

24. It may be that, were those defects the only claim made by the Owners Corporation, the claim could have been brought in the District Court of New South Wales or at the New South Wales Civil and Administrative Tribunal.

25. But the claim has been brought together with the other claim to which I have referred. Being, at the end of the day, uncontested, I see no reason why the Builder and the Developer should not pay the Owners Corporation’s costs in relation to this aspect of the matter.

Conclusion

26. The parties should now bring in short minutes to give effect to these reasons.

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Endnotes

Decision last updated: 26 February 2025