Forte Sydney Construction Pty Ltd v Department of Customer Service

Texts Cited: Nil

Category: Costs

Parties: Forte Sydney Construction Pty Ltd (Plaintiff)
Department of Customer Service (First Defendant)
Elizabeth Stewart, Acting Executive Director Building
Operations and Assistant Building Commissioner,
Building Commission NSW as an authorised delegate of the Secretary of the NSW Department of Customer Service (Second Defendant)
Mitchell Avenue Development Pty Ltd (Third Defendant) (Submitting appearance)

Representation: Counsel:
G Campbell and C Honnery (Plaintiff)
T Liu (First Defendant and Second Defendant)
Solicitors:
Rosemont Partners (Plaintiff)
Department of Customer Service (First Defendant and Second Defendant)
Gavel & Page Lawyers (Third Defendant)

File Number(s): 2024/00283850

Publication restriction: Nil

JUDGMENT

1. The only issue requiring determination, after the first and second defendants capitulated shortly before the hearing, is whether the first and second defendants should be ordered to pay the plaintiff’s costs on an indemnity basis, as sought by the plaintiff. The third defendant filed a submitting appearance.

2. The substantive proceedings were commenced on 31 July 2024, when the plaintiff filed a summons challenging the validity of a Building Work Rectification Order.

3. Directions were made on several occasions to have the case ready for a hearing. On 6 March 2025, the defendants were ordered to file and serve evidence and submissions by 11 April 2025 (this was extended to 24 April 2025 by consent orders made on 17 April 2025) and the matter was listed for hearing on 13 May 2025. The defendants acknowledge that they did not comply with these directions. It was not until either 2 or 5 May 2025 that they served their evidence (which exceeded more than 3600 pages) and their written submissions, which defended the validity of the Order. (The date of service is uncertain having regard to a discrepancy between the plaintiff’s written submissions on costs and a supporting affidavit of the plaintiff’s solicitor, Mr Jason Koh, sworn 26 May 2025.) The plaintiff was left with insufficient time to consider the evidentiary material.

4. It was not until the afternoon of 9 May 2025, being two business days before the hearing date scheduled for 13 May 2025, that a decision was made to revoke the Order.

5. The first and second defendants are willing to pay the plaintiff’s costs on an ordinary basis for the period from the commencement of the proceedings to their termination. As noted above, however, they resist any order for costs on an indemnity basis.

6. As is well known, the power to order costs under s 98 of the Civil Procedure Act 2005 (NSW) involves the exercise of a discretion which must be wielded judicially (see Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [65] per McHugh J). It is well-settled that indemnity costs will generally only be awarded if there is a “special or unusual feature” of the particular case which warrants a departure from the normal rule that costs are on an ordinary party/party basis (see Harrison v Schipp [2001] NSWCA 13 at [139]). Some of the circumstances in which it may be appropriate to award indemnity costs were identified by Shepperd J in his frequently cited judgment in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233-234; [1993] FCA 536. They include circumstances where the conduct of the party against whom indemnity costs are sought was “plainly unreasonable” or exhibited “delinquency” (see James v Douglas [2016] NSWCA 178 at [63]). It is also well to acknowledge that an award of indemnity costs is not intended to be punitive and remains compensatory (see Latoudis v Casey (1990) 170 CLR 534 at 543 per Mason CJ and 567 per McHugh J; [1990] HCA 59).

7. In my view, there are aspects of the conduct of the first and second defendants which are appropriately described as plainly unreasonable. That conduct is described at [3] above concerning non-compliance with the directions dated 6 March 2025 and inundating the plaintiff with over 3600 pages of evidence only shortly before the trial and without any indication that the trial would not proceed. Naturally, the plaintiff had to do its best to review the belated submissions and evidence provided by the first and second defendants with only six business days leading up to the scheduled hearing on 13 May 2025.

8. In these circumstances, I am satisfied that it is appropriate to order the first and second defendants to pay the plaintiff’s costs on an indemnity basis for the period from 17 April 2025 to 13 May 2025. They should otherwise pay the plaintiff’s costs on the ordinary basis.

9. In circumstances where the plaintiff has failed to obtain an order for costs on an indemnity basis for the entire period of the litigation, but has succeeded in obtaining a more limited indemnity costs order, it is also appropriate that the first and second defendants pay the plaintiff’s costs of their application for costs on an ordinary basis.

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