The Owners Strata Plan 98726 v Elite Realty Development Pty Ltd

[2024] NSWSC 397

Supreme Court

New South Wales

Medium Neutral Citation:

The Owners – Strata Plan 98726 v Elite Realty Development Pty Ltd [2024] NSWSC 397

Hearing dates:

12 April 2024

Date of orders:

12 April 2024

Decision date:

12 April 2024

Jurisdiction:

Equity - Technology and Construction List

Before:

Stevenson J

Decision:

First cross-claim filed by the first defendant/cross-claimant dismissed as against the third cross-defendant; first defendant/cross-claimant to pay the third cross-defendant's costs of the cross-claim on a gross sum basis in the amount of $213,000; Hazem Abdallah Afyouni pay to United Consulting Engineers Pty Ltd the sum of $40,000 in respect of its costs of the cross-claim; direct the third cross-defendant to give notice to the first defendant/cross-claimant of the making of these orders; grant the first defendant/cross-claimant liberty to apply to set aside these orders by 5pm on 17 April 2024

Catchwords:

CIVIL PROCEDURE – summary disposal – application for dismissal of proceedings for want of due despatch – where first defendant/cross-claimant has disengaged from proceedings – whether gross sum costs order should be made against first defendant/cross-claimant in favour of third cross-defendant

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Bell v Hartnett Lawyers (No 4) [2023] NSWSC 1592

Nature’s Care Holdings Pty Ltd v Chen (No 4) [2024] NSWSC 379

Category:

Procedural rulings

Parties:

The Owners – Strata Plan 98726 (Plaintiff)
Elite Realty Development Pty Ltd (First Defendant/Cross-Claimant/Respondent)
United Consulting Engineers Pty Ltd (Third Cross-Defendant/Applicant)

Representation:

Counsel:
S A Adair (Third Cross-Defendant/Applicant)

Solicitors:
Wotton + Kearney (Third Cross-Defendant/Applicant)

File Number(s):

2021/76656

EX TEMPORE JUDGMENT (REVISED)

1. In these proceedings, the plaintiff owners corporation sues the defendant builder, Elite Realty Development Pty Ltd, alleging defects in the common property of the premises of which it is the owners corporation.

2. Elite has made cross-claims against a number of parties including the applicant before me, United Consulting Engineers Pty Ltd.

3. The procedural history of the proceedings to date is summarised in the submissions of Mr Adair, who appeared for United, as follows:

“a.   On 22 April 2020 the [Owners Corporation] issued these proceedings in the NSW Civil and Administrative Tribunal.

b.   On 26 August 2020 Elite filed a cross application (i.e., its Cross Claim) against United.

c.   In early 2021 the proceedings were transferred to this Court; the first directions hearing was listed on 23 April 2021.

d.   In September and October of 2022 Elite served its structural engineering evidence – two reports of Mr Leigh Appleyard.

…

f.   In October 2023 the Court made orders for joint expert reports. … these were not completed

g.   Subject to preparation of joint reports, the proceedings are ready for hearing.”

4. As Mr Adair submitted, Elite has been disengaged from these proceedings from October of last year. The evidence before me shows that:

“a.   Elite has been unrepresented in the proceedings since 3 August 2023.

b.   At the directions hearing listed before Ball J on 13 October 2023, Elite consented among other things to orders for the preparation of joint expert reports.

c.   In November 2023, Elite failed to produce its expert, Mr Appleyard, who told United’s expert that he had not been paid and ‘had no instructions’.

d.   On 5 February 2024 United’s solicitors emailed Elite asking whether it would produce Mr Appleyard for the conclave. Elite gave no response.

e.   On 20 March 2024, Elite was copied in on email correspondence referring to the directions hearing listed on 22 March 2024.

f.   The proceedings were listed for directions on 22 March 2024. Elite failed to appear.

g.   On 22 March 2024, following the directions hearing, the plaintiff’s solicitor notified Elite of the orders made that day.

h.   On 25 March 2024, United’s solicitors emailed Elite giving notice of its intention to file the Motion.

i.   Elite did not respond to that notice; it has not sent any communication to United’s solicitors since at least October 2023.”

5. In those circumstances, by Notice of Motion filed on 5 April 2024, United seeks orders that Elite’s cross-claim against it be dismissed for want of prosecution, that United’s costs be assessed on a gross sum basis, and that the director of Elite, Mr Afyouni, pay $40,000 of those costs.

6. Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 12.7(1) enables the Court to, in appropriate cases, dismiss proceedings if the relevant moving party has not prosecuted the proceedings with due despatch. I am satisfied that that is a fair description of what has occurred here.

7. Added to the circumstances, to which Mr Adair has referred, is the fact that it appears that Elite was not present today when the matter was called through before Ball J earlier this morning, despite the fact that Mr Afyouni was copied in on an email to the parties from Ball J’s Associate notifying them of details of the telephone callover of the motion this morning.

8. Elite has not appeared before me. Against the possibility that, against the odds, Mr Afyouni is somewhere in the court today, I will qualify the order that I am about to make with an order granting Elite liberty to apply on short notice to seek to have the orders set aside. That order will be heavily qualified. I am otherwise satisfied that the proceedings should be dismissed under UCPR r 12.7(1).

9. United also seeks an order under s 98 of the Civil Procedure Act2005 (NSW) that I make a gross sum costs order. The circumstances under which such an order may be made was recently summarised by Peden J in Bell v Hartnett Lawyers (No 4). [1] Many factors may be taken into account when considering to make a gross sum order. The factor relied on principally by United is that the evidence reveals that Elite appears to be in a parlous financial position and that it would not have the ability to meet the costs that would be incurred on assessment.

   1. [2023] NSWSC 1592 at [49].

10. I must be satisfied that there is before the Court a reasonable basis upon which to make the cost assessment proposed. The evidence shows United’s actual costs to date, including disbursements, are in the order of $300,000. The figure sought is some $213,000. That figure has been calculated as being 70% of United’s actual costs and disbursements. United’s solicitor, Mr Knight, has deposed that in his experience, and indeed the Court’s, a successful party to litigation typically recovers something in the order of 70% to 80% of their solicitor/client costs and usually something in the order of 100% of counsel’s fees and expert’s fees. The figure proposed is in fact 70% of the total of United’s costs and disbursements which, in the circumstances, is a relatively conservative estimate. I am satisfied that I should make a gross sum costs order in the amount sought.

11. United also seeks a limited third party costs order against Mr Afyouni. In a judgment I published yesterday,^[2] I summarised the principles relevant to the making of a third party costs order.

    2. Nature’s Care Holdings Pty Ltd v Chen (No 4) [2024] NSWSC 379.

12. Another circumstance in which a third party costs order may be made is where the person against whom the order is sought can be seen to have been in control of the litigation and has caused the relevant party to conduct the proceedings in an unreasonable manner. It appears reasonable to infer that Mr Afyouni is the person who was responsible for the manner in which Elite has laterally conducted these proceedings, which, in my opinion, are relevantly unreasonable.

13. There is one particular circumstance relevant here. That is that Mr Afyouni, in the course of a security for costs application, gave an undertaking to the Court on 19 November 2021 to be personally liable to an amount of $40,000 for any costs order made against Elite. That appears to me to provide a separate reason why the order sought by United should be made.

14. In those circumstances I make the following orders:

1. Order pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 12.7(1) that the First Cross-Claim filed by the first defendant/cross-claimant on 5 June 2021 be dismissed as against the third cross-defendant.

2. Order pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW) that the first defendant/cross-claimant pay the third cross-defendant's costs of the cross-claim on a gross sum basis in the amount of $213,000.

3. Order pursuant to s 98(1)(b) of the Civil Procedure Act that Hazem Abdallah Afyouni pay to United Consulting Engineers Pty Ltd the sum of $40,000 in respect of its costs of the cross-claim referred to in order 1 above.

4. Direct the third cross-defendant, by 5pm today, 12 April 2024, give notice to the first defendant/cross-claimant of the making of these orders by email to: xxx

5. Grant the first defendant/cross-claimant liberty to apply to set aside these orders, such liberty to be exercised by 5pm on 17 April 2024.

**********

Endnotes

Decision last updated: 16 April 2024