CPB Contractors Pty Ltd v Rizzani De Eccher Australia Pty Ltd

Supreme Court of NSW|2018-02-09|Before: Ward CJ

Judgment

HER HONOUR: On 19 December 2017, I published my reasons (CPB Contractors Pty Ltd v Rizzani de Eccher Australia Pty Ltd [2017] NSWSC 1798) in a dispute between parties to an unincorporated joint venture for the undertaking of design and construction works in connection with the widening of the M4 Motorway in Sydney, namely as to whether the defendant (Rizzani de Eccher Australia Pty Ltd - "RdE") was bound to pay a Called Sum of $8.5m for the purposes of the joint venture (the Called Sum Dispute).
I dismissed RdE's notice of motion seeking a stay of the proceedings by reference to an arbitration clause in the parties' joint venture agreement (the Stay Dispute) and, having found that RdE was estopped in all the circumstances from acting inconsistently with its promise to do so, ordered RdE to sign a written resolution of the Joint Venture Board ("JV Board") for the payment of the Called Sum. However, I declined to grant the further relief sought by the plaintiff, CPB Contractors Pty Ltd ("CPB") (namely, declaratory relief and a mandatory injunction as to the payment of the Called Sum). I made directions for brief written submissions on costs to be filed with a view to determining the issue of costs on the papers.
The parties have now filed, and I have had an opportunity to consider, submissions as to costs. These are my reasons for the costs order that I will now make. I do not propose to repeat the background to the dispute which is set out in my earlier reasons.
CPB argues that the appropriate order for costs is that RdE should pay CPB's costs of the proceedings on the ordinary basis. RdE submits that there should be no order as to costs, such that the parties bear their own costs of the proceeding, or alternatively that RdE should pay 50% (or less) of CPB's costs of the proceedings.

Determination

It is accepted by the parties that there is a wide discretion as to the award of costs (see s 98 of the Civil Procedure Act). The principles in relation to the exercise of that discretion are well known and need not here be repeated. There are cases in which the question as to what is the "event" has required careful consideration and where there can be seen to have been more than one relevant event. There are cases in which assessment on an issue by issue basis has been found to be appropriate (as producing a fair result) and those in which it has not been considered appropriate to apportion costs according to the issues that were in dispute notwithstanding that there was a mixed outcome in the proceedings. Various of those cases (including ones in which I have previously opined on these issues) were cited in the parties' respective submissions. It is not necessary here to set them out.
I accept that CPB did not succeed on all the issues before me (and that it did not obtain precisely the relief it had sought). I also accept that costs are likely to have been wasted by the abandonment of the conventional estoppel claim that was raised in the original reply filed by CPB (see CPB's Technology and Construction List Reply filed on 27 November 2017, at [1]). Against those matters is the failure by RdE prior to service of its evidence in the proceedings to inform CPB of what was on any view of things a critical factual contention (namely, that Mr Mortoni claimed to have absented himself from the meeting during the whole of the time that the discussion as to the Called Sum took place). The surprising late disclosure of that contention makes it not unreasonable for CPB to have tested in cross-examination the evidence as to what transpired at the relevant JV Board meeting and undermines the contention by RdE that such evidence was unnecessary for the estoppel claim that ultimately succeeded.
Two factors lead me to conclude that the appropriate order is that RdE should pay the ordinary costs of CPB. The first is that, absent the proceedings, CPB would not have achieved (in as expeditious a fashion as was made possible by the running of the matter in the Commercial List) the outcome that it did (albeit that it did not obtain the further injunctive relief that it had sought). Without the proceedings having been conducted in this Court, the order requiring RdE to sign the JV Board resolution for the Called Sum would not have been made at the time that it was. There are important consequences that flow from such a resolution. Whether or not the Board dysfunction was a matter resulting from CPB's election to invoke its perceived legal rights in relation to the default notices, the fact remains that the parties were at loggerheads as to whether the Called Sum was payable and I am satisfied that there was urgency for the determination of that issue in relation to the ongoing project in which they are engaged. That leads to the second factor - the urgency of the matter (which arose, at least, from the existence of outstanding claims by sub-contractors and other creditors; from the inability on the part of the Project Director to certify that all sub-contractors had been paid; and from the need for a cash injection to the joint venture: see [155] of my reasons). In those circumstances, where the parties on both sides were responding to issues raised in pleadings that were prepared against a tight timeframe, the refusal by CPB immediately to abandon its conventional estoppel claim does not in my opinion have the significance attributed to it by RdE.
If one steps back from the fray and asks the question as to who, in substance, was successful in the matter, the answer in my opinion is clear - it was CPB. Thus I consider that the ordinary rule that costs follow the event should be applied.

Order

For the above reasons I order as follows: 1. The defendant is to pay the plaintiff's costs of the proceedings on the ordinary basis.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 February 2018

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