Bannister & Hunter Pty Ltd v Transition Resort Holdings Pty Ltd

Judgment 1WARD JA: This is an application that has been referred to me by the Registrar for hearing of a notice of motion dated 6 March 2014 in which the appellant, Bannister & Hunter Pty Limited, seeks an order staying an order made by the primary judge on 18 February 2014, referring out to a referee the question of the proper nature and extent of certain rectification works and the reasonable costs thereof. 2The dispute in question is a dispute between a property developer and project manager in relation to development works carried out somewhere near Newcastle. The project manager obtained judgment in the proceedings before the primary judge for unpaid fees but was unsuccessful in defending a crossclaim by the property developer for damages for breach of contract in relation to certain of the rectification works. The appeal before this Court relates to the findings and decision of his Honour on the cross-claim. 3Handed up in the course of the submissions by counsel for the respondent is a schedule setting out the quantification of the heads of damage not appealed in the notice of appeal, as well as those that are appealed in the notice of appeal. That suggests that the heads of damage in respect of which there is no appeal are in the order of somewhere between $246,000 and $350,000 plus interest (depending on whether there is an arithmetical correction to be made to his Honour's decision) and that the heads of damage in respect of which there is an appeal are in the order of about 318,000 (subject to quantification for damages for rectification of the fill which is the issue the subject of the referral out). 4His Honour's judgment was delivered on 20 December 2013. In the course of the hearing before the primary judge, his Honour had adverted to the possibility of there being a referral out in relation to the quantification of the costs of rectification. As I understand it, this arose because the respondent had adduced some evidence of the costs of rectification, the appellant had adduced no evidence of the costs of rectification, and the outcome of a conclave of experts was that there were a number of possibilities as to how the site could be rectified and not all of those had been costed. 5I have been taken to the transcript of exchanges between counsel and his Honour on 12 November 2013 in which reference was made to this, and to the possibility that there might be cost consequences of this (which read in context appears to be a suggestion of adverse cost consequences for the respondent of the referral on the basis that the matter had gone to trial on all issues). His Honour observed the costs could be dealt with separately. 6Of the grounds of appeal that the appellant raises in these proceedings, the relevant grounds of appeal for the purposes of the issue of the rectification costs are grounds 7 to 11. Grounds 7 and 8 refer to factual findings made by his Honour. Ground 9 contends that his Honour erred in finding that there was a breach of a contractual obligation of contract supervision in respect of the bulk earthworks. Ground 10 relates to the error it is contended was made by his Honour in finding that the rectification work was necessary to produce compliance with the contract and that the respondent was entitled to recover the reasonable costs of rectification. Ground 11 raises an issue as to whether there was an error in finding that the fact of sale of the property did not preclude the respondent from receiving damages based on the cost of rectification of the defects in what is referred to as the VENM layer. 7Ground 11 contends that his Honour erred in standing over the questions of the proper nature and extent of rectification and the reasonable costs thereof for determination by a referee. The appellant concedes that the appellant needs leave to appeal from the decision of his Honour to stand the matter over for determination by a referee, that it is a decision made in the exercise of a discretion, and that the general principles in relation to whether leave should be granted in such a case would apply. 8The appellant relies upon an affidavit of Mr Charles Thornley sworn 6 March 2014, the solicitor on the record for the appellant, which Mr Thornley estimates the further costs which will be incurred in relation to the reference as being in the order of approximately $100,000. It is apparent from the exhibits to Mr Thornley's affidavit that the estimate proceeds on the basis that the referral will be for a four day hearing. The solicitor for the respondent, Mr Brendan Hoffman, whose affidavit sworn 14 March 2014 is relied upon by the respondent points out that the matter has been listed for a reference hearing for two days only and not four days. 9The opposing cost estimates are in the order of $70,000, on Mr Hoffman's estimation, and in the order of $100,000, on Mr Thornley's estimation (although, as noted, the latter proceeds on a mistaken premise that the reference hearing is to be a four day hearing). 10The applicant on this notice of motion submits that the relevant principles to be applied in determining whether there should be a stay of the referral out of those set out by the Court of Appeal in Alexander v Cambridge Credit Corporation Limited (Receivers Appointed) (1985) 2 NSWLR 685. Reference has also been made to Nikolaides v Legal Services Commissioner [2005] NSWCA 91 where Bryson JA at [18] noted that the power to order a stay was discretionary and should not be exercised lightly and that it would be necessary to find that if there were to be no stay then there would be so adverse and serious a consequence that interlocutory intervention should take place notwithstanding that there has not been an opportunity for full consideration. 11I have also been referred to Thomson v Young [2013] NSWCA 300 where Leeming JA referred at [6] to [9] to the applicable principles that apply where a party seeks to challenge an interlocutory decision of practice and procedure. His Honour referred to Nikolaides and to the passage to which I have just referred. 12The applicant contends that there is an arguable case on appeal and that the balance of convenience favours the grant of a stay on the basis that the costs of the reference will be in excess of at least some $76,000 (on the respondent's estimate) and that those costs will have been unnecessarily incurred in the event that the applicant succeeds on the relevant grounds of appeal. 13Counsel for the respondent emphasises a number of matters, including that there was no evidence at all by the applicant on the question of rectification costs in the hearing below. Secondly, it is submitted that the appeal sought to be raised by the appellant in grounds 7 to 11 is not fairly arguable having regard to concessions made in the course of evidence by the principal of the applicant. On that basis, it is said that it is likely that it will be necessary for the issue of quantum to be determined and that the effect of a stay will be further to delay the proceedings, inconsistently with the requirement for the just, quick and cheap disposition of the real issues between the parties to which the Court must have regard pursuant to s 56 of the Civil Procedure Act 2005 (NSW). 14Thirdly, it is noted by counsel for the respondent that the applicant raised no objection to the referral out when this was adverted to by the primary judge and has consented to the timetable in process for the referral out. 15As far as costs are concerned, the respondent emphasises that if the applicant is ultimately successful on the appeal then the costs of what would (on that scenario) have been an unnecessary referral may be dealt with at that stage. 16There is no evidence going to any particularly adverse consequence for the appellant if it is required to incur in advance costs which might ultimately prove to be unnecessary but which could then be the subject of costs orders in its favour at the conclusion of the appeal. 17I note that in Alexander v Cambridge Credit Corporation one of the matters that the Court indicated had to be taken into account was whether or not, any apart from the fact that prima facie a successful party is entitled to the benefit of the judgment and to commence with the presumption that the judgment is correct, is that the onus is upon the applicant to demonstrate a proper basis for a stay that will be fair to all of the parties and that the mere filing of an appeal will not of itself provide a reason or demonstrate an appropriate case nor will it discharge the onus which the applicant bears. 18It is not in my view necessary to reach a conclusion as to the merits of the appeal that has been brought by way of the notice of appeal filed in March 2014. For the purposes of this application, I proceed on the assumption that they are not unarguable. The factor that leads me to dismiss the application for a stay of the referral out is that I am not satisfied that the balance of convenience favours such an order in circumstances where I am not satisfied that the effect of incurring at this stage costs which might ultimately prove to have been unnecessarily incurred will produce such an adverse result as to warrant interlocutory intervention at this stage. I also place weight on the fact that there was no objection raised to the referral out when it was first foreshadowed by his Honour. Nor was there any objection other than a request for a stay in order to obtain instructions for some short period of time to the timetabling for the referral. The matter I am told has been listed for a reference hearing on 14 and 15 May with a report to be provided by the end of May. 19In the circumstances, I consider that the applicant has not established a basis for a stay of those orders and I dismiss the notice of motion dated 6 March 2014. 20I see no reason why the general rule as to costs should not follow and I order the applicant to pay the respondent's costs of the notice of motion for a stay.