EHome Construction Pty Ltd v GCB Constructions Pty Ltd (No 2) [2020] QSC 314

SUPREME COURT OF QUEENSLAND CITATION: EHome Construction Pty Ltd v GCB Constructions Pty Ltd (No 2) [2020] QSC 314 PARTIES: EHOME CONSTRUCTION PTY LTD ABN 72 607 445 009 (applicant) v GCB CONSTRUCTIONS PTY LTD ABN 26 151 244 254 (first respondent) RANJIT KHOSLA J1077622 (second respondent) THE ADJUDICATION REGISTRAR, QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (third respondent) FILE NO/S: BS 6386 of 2020 DIVISION: Trial Division PROCEEDING: Originating Application DELIVERED ON: 14 October 2020 DELIVERED AT: Brisbane HEARING DATE: On the papers JUDGE: Bond J ORDER: The applicant must pay the first respondent’s costs of the proceeding (including reserved costs), to be assessed on the standard basis. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS – OFFER OF COMPROMISE OR OFFER TO SETTLE OR CONSENT TO JUDGMENT PURSUANT TO RULES – WHO IS PLAINTIFF AND WHO IS DEFENDANT – where the applicant contended that an adjudication decision in favour of the first respondent was an invalid adjudication decision – where the first respondent made an offer to settle under UCPR Chapter 9 Part 5 and obtained an outcome no less favourable than the offer – where the first respondent contends it is in the position of a plaintiff or counterclaimant in that it was required to establish the validity of the adjudication decision – whether the first respondent should have its costs paid on the indemnity basis -- 1 of 5 -- 2 PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – RELEVANT CONSIDERATIONS GENERALLY – where the first respondent contends that the applicant’s arguments were without merit – where the first respondent had brought an interlocutory application to have the applicant declared in contempt for failing to comply with an order requiring payment of monies into Court – whether either circumstance justifies a departure from the usual course of costs assessed on the standard basis Uniform Civil Procedure Rules 1999 (Qld), r 360 Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225; [1993] FCA 801, applied EHome Construction Pty Ltd v GCB Constructions Pty Ltd [2020] QSC 291, cited Mango Boulevard Pty Ltd v Spencer [2008] QCA 392, cited Smith v Wessling-Smith [2017] QSC 189, considered Introduction [1] In this proceeding, the applicant sought declarations, principal amongst which was a declaration that an adjudication decision by the second respondent was not a valid adjudication decision pursuant to the Building Industry Fairness (Security of Payment) Act 2017 (Qld). [2] For the reasons which I expressed in an ex tempore judgment on 18 September 2020, the application failed: see EHome Construction Pty Ltd v GCB Constructions Pty Ltd [2020] QSC 291. [3] I have now received submissions on the question of the orders which should be made in relation to the costs of the proceeding. [4] The applicant accepts that costs should follow the event and submits that the costs order should be that the applicant pay the first respondent’s costs of the originating application to be assessed on the standard basis. [5] The first respondent seeks an indemnity costs order on two bases, each of which will be considered under a separate heading below. In order to deal with those arguments, first it is necessary to identify some matters concerning the history of this proceeding. Relevant history of the proceeding [6] The first respondent obtained an adjudication decision in its favour under the Act. An adjudication certificate was issued under the Act on 9 June 2020 for the amount of $614,265. The applicant sought to have the adjudication decision set aside on the basis of jurisdictional error. To preserve the position, the applicant brought an application for interlocutory orders restraining the respondents from taking any steps in furtherance of, or to enforce, the adjudication decision, until the trial or other order. [7] On 29 June 2020, I made consent orders resolving that application. The consent orders required, inter alia, that within 14 days from the date of the order, the applicant would provide to the Registrar an irrevocable bank guarantee in a form acceptable to the Registrar -- 2 of 5 -- 3 in the amount of $668,342.58, to be held by the Registrar pending further or earlier order of the Court. The proceeding was set down for trial before me on 18 September 2020 and directions were made regarding pleadings and submissions. Costs were reserved. [8] The applicant did not provide the bank guarantee by 13 July 2020, as had been ordered. [9] On 14 July 2020, the applicant’s solicitors wrote to the first respondent’s solicitors advising that the applicant’s director had been hospitalised due to a medical emergency; that he was due to be discharged within 48 hours; and the bank guarantee would be issued later in the week. [10] On 15 July 2020, the first respondent filed an application to be heard on 21 July 2020 by which it sought, inter alia, a declaration that the applicant was in contempt for having not obeyed the order dated 29 June 2020 and that it be punished for contempt; that the applicant’s originating application be stayed until the order was complied with; and that the relevant respondents be released from the restraints to which they had been made subject by my order of 29 June 2020. [11] On 21 July 2020, Boddice J made consent orders which resolved the first respondent’s application. Those orders provided that – (a) my order for the provision of a bank guarantee was vacated; (b) the applicant was to pay the sum of $668,342.58 into Court by 24 July 2020; (c) in the event the applicant failed to pay the sum into Court as required, the relevant respondents would be released from the restraints to which they had been made subject by my order of 29 June 2020 and the originating application would be stayed until the amount was paid into Court; (d) the first respondent’s application was otherwise dismissed; and (e) costs were reserved. Indemnity costs because of the first respondent’s offer to settle [12] UCPR r 360 relevantly provides: 360 Costs if offer by plaintiff (1) If— (a) the plaintiff makes an offer that is not accepted by the defendant and the plaintiff obtains an order no less favourable than the offer; and (b) the court is satisfied that the plaintiff was at all material times willing and able to carry out what was proposed in the offer; the court must order the defendant to pay the plaintiff’s costs calculated on the indemnity basis unless the defendant shows another order for costs is appropriate in the circumstances. [13] The first respondent submitted that it should have its costs of the proceeding on the indemnity basis because – (a) on 31 July 2020, it made a formal offer to settle under UCPR Chapter 9 Part 5; and (b) by operation of UCPR r 360, it was entitled to have its costs paid on the indemnity basis. [14] The material terms of the offer to settle were that: -- 3 of 5 -- 4 (a) the applicant arrange to release to the first respondent the sum of $614,265 from the funds the applicant had paid into Court; (b) the balance of the amount paid into Court be paid to the applicant; and (c) each party bear its own costs. [15] The first respondent did obtain an order no less favourable than the offer which it had made. My judgment of 18 September 2020 resulted in an order that the $668,342.58 which had been paid into Court consequent upon the consent orders made by Boddice J on 21 July 2020, with accretions, be paid out to the first respondent. [16] However, it can be seen that the first respondent cannot avail itself of the provisions of r 360 unless it can be regarded as a plaintiff. It argued that it could be regarded as a plaintiff. Its argument was that, in resisting the application, it was effectively in the position of a counterclaimant because it was required to establish the validity of the adjudication decision and its entitlement to be paid the adjudicated amount. [17] I reject the proposition that the first respondent was effectively in the position of a counterclaimant. The moving party in respect of the relief sought by the originating application was the applicant. The applicant only obtained the benefit of an interlocutory injunction on condition that it secure the position of the first respondent in the way dealt with by the interlocutory orders which I have explained. The applicant was the party which had to demonstrate to me that jurisdictional error existed. There is no valid way to characterise the first respondent as effectively a counterclaimant. [18] For completeness, I pause to note that the first respondent did not advance any argument that the offer should be regarded as Calderbank offer and that indemnity costs would be justified on the basis that the refusal to accept the offer should be regarded as an imprudent rejection of an offer to settle. The relevant principles by which that proposition might be assessed were discussed by me in Smith v Wessling-Smith [2017] QSC 189, in which I applied the decision of Holmes JA (as the Chief Justice then was) in Hadgelias Holdings and Waight v Seirlis [2014] QCA 325. Because the first respondent’s argument rested entirely on UCPR r 360, it is unnecessary to consider the application of those principles. Indemnity costs on ordinary principles [19] The first respondent’s second argument was that, further or alternatively to the first argument, it ought to have its costs on the indemnity basis for one or more of these three reasons: (a) On the eve of the hearing before me, the applicant abandoned an argument that jurisdictional error was established because the payment claim had not been served strictly in accordance with the applicable statutory requirements. The first respondent contended that the abandoned argument was baseless and should never have been advanced, and that the particular costs incurred in responding to the argument were unnecessary and wasted. (b) The two arguments which were advanced at the hearing were without merit and should never have been advanced in the first place. (c) The applicant had been in contempt of court because it had not complied with the 29 June 2020 consent orders. The first respondent’s costs of its application in respect of the applicant’s contempt should be paid on the indemnity basis under UCPR r 703(2)(c). -- 4 of 5 -- 5 [20] The law in relation to the circumstances in which indemnity costs orders should be made is not in doubt. It has been considered on many occasions. As I explained in Smith v Wessling- Smith at [6] by reference to the oft-cited decision of Sheppard J in Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 at 233, when there is a basis for ordering one party to pay the costs of another party, the Court ought not usually make an order for the payment of costs on some basis other than the standard basis, unless there is some particular reason which warrants departure from the usual course. [21] It is true that the making of allegations which ought never to have been made is a recognised basis for departure from the usual course. But that basis is not established simply by the fact that a trial judge determines at trial that the arguments fail. Nor is it established simply by the fact that counsel has exercised a forensic judgment before trial not to press one of three available arguments: cf Mango Boulevard Pty Ltd v Spencer [2008] QCA 392 at [11] to [12] per Muir JA and Mackenzie J (with whom McMurdo P agreed). There is nothing in the two arguments which failed in the hearing before me on 18 September 2020, or the argument abandoned on the eve of that hearing, which persuades me to regard the usual course as having been displaced. [22] Finally, there is no merit whatsoever in the first respondent’s argument that the applicant had been in contempt of court. Indeed, the first respondent consented to Boddice J making orders on 21 July 2020 dismissing its application for precisely that declaration. The applicant’s failure to comply with the order requiring provision of a bank guarantee would have justified the application to set aside the restraints and to stay the proceeding, but not a proceeding for contempt. And unless there is some reason to disbelieve the applicant’s suggestion that some delay had been caused because of the hospitalisation of the applicant’s director (and none has been suggested), there is no reason for the first respondent to have its costs of its application on any basis other than the standard basis. [23] In this case, the three contentions advanced by the first respondent do not provide a sufficient basis to depart from the usual course, whether considered separately or cumulatively. Conclusion [24] The applicant must pay the first respondent’s costs of the proceeding (including reserved costs), to be assessed on the standard basis. -- 5 of 5 --