GROUNDED CONSTRUCTION GROUP PTY LTD -v- KW CIVIL & CONSTRUCTION PTY LTD [2025] WASC 307 (6 August 2025)

1. I will first explain why I have declined to make an award of indemnity costs in this matter.
2. I recently summarised the principles applicable to the making of an award of indemnity costs in Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 19].[7] The following principles are drawn from that summary.
   1. An award of indemnity costs is a departure from the usual order that costs be awarded on a party and party basis. The categories in which indemnity costs may be awarded are not rigid or closed. Indemnity costs are only awarded in exceptional circumstances.
   2. One category in which such an award is appropriate is where the action 'has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success'. In cases such as that, the action 'must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established laws'.
   3. Whether that is so is determined objectively - it does not direct attention to the actual legal advice given to the party. The Court should not be too quick to characterise a case as hopeless - parties should not be discouraged from persisting in an action merely because success is uncertain. Whether a case was hopeless must be judged without the benefit of hindsight.
   4. A properly crafted special costs order may obviate the need for an indemnity costs order, where components of cost scale items are allowed above the applicable scale ceiling.
3. The plaintiff sought an order that the defendant pay its costs on an indemnity basis. In support of that order, the plaintiff noted that the Court had found the defendant ought not have to have served the Statutory Demand while the earlier Recovery Proceeding was on foot in this Court. The concurrency of proceedings gave rise to an abuse of process by reason of the oppression placed on the plaintiff, and the defendant should not have commenced and persisted with parallel proceedings.
4. The plaintiff referred to the Court's concern regarding the effect of the duplication of processes on the parties' costs and the impact on the use of the resources of the Court. I had concluded that the service and subsequent pursuit of the Statutory Demand has led to the parties incurring additional legal costs and drawn further on the resources of the Court.
5. In the alternative, the plaintiff sought that the indemnity costs be awarded from 30 September 2025, being the date on which the plaintiff formally wrote to the defendant and requested that it withdraw the Statutory Demand on the basis that it constituted an abuse of process. Within that letter, the plaintiff raised the prospect of seeking indemnity costs if the defendant persisted with the Statutory Demand.
6. In my view, the setting aside of a statutory demand under s 459J(1)(b) CA as an abuse of process properly invites consideration as to whether an order for indemnity costs should also follow. An abuse of process finding often provides a sufficient platform for an indemnity costs submission.[8]
7. That will not inevitably be the case.
8. The costs discretion must be exercised by having regard to all of the circumstances of the particular case.
9. There are some additional matters in the present context which have dissuaded me from making such an order. Those additional matters are, first, the conduct of the defendant and its solicitors in actively seeking to avoid any duplication between the concurrent proceedings[9] and, second, the fact that express representations were made by the plaintiff's personnel to the defendant's representatives to the effect the plaintiff itself had solvency concerns.[10]
10. The first of these matters signals to the Court that the defendant and its solicitors endeavoured to minimise the duplication in the proceedings. I ultimately rejected the defendant's argument that its conduct in this regard provided an antidote to the problem which had arisen, but the rejection of that argument does not preclude these matters being considered when exercising the costs discretion.
11. The second of these matters provides an explanation for the conduct of the defendant in pursuing the statutory demand procedure. Specifically, the defendant was informed in August 2024 that the plaintiff held concerns about its solvency. As it happens, those concerns appear to have diminished thereafter, but one can readily understand why the defendant may have been stung into action at that point. Indeed, I rejected the plaintiff's contention that the apparent resolution of the solvency issues ought to have, without more, led to a withdrawal of the demand on its own, and rejected the submission that this demonstrated an improper purpose on the part of the defendant.
12. The foregoing matters should be considered when the costs discretion is exercised. These matters, in my view, preclude a finding on my part that the defendant's conduct, taken as a whole, was unreasonable or that it persisted with a case that was hopeless. Further, I have not found the existence of any collateral purpose in this case.
13. The essence of the determination made by the Court in this case is that an abuse of process has occurred, founded in the existence of parallel proceedings. I accept that in many cases that may lead to an indemnity costs award, which is an order that should only be made in exceptional circumstances. However, the broader and particular facts of this dispute have led me to conclude that such a result is not appropriate here, and this is not a case in which the conduct of the defendant requires some sanction by the Court.

C. Special costs orders under s 141(3) of the Uniform Law

1. The plaintiff's application for special costs orders under s 141(3) of the Uniform Law might initially be characterised as somewhat ambitious in the context of an application to set aside a statutory demand.
2. Such applications are frequently dealt with by this Court, typically by the Master, in an efficient way involving one substantive hearing and limited affidavit material. The scale amounts are usually more than adequate to allow proper recovery of a successful party's legal costs and disbursements, even where counsel is briefed on the application.
3. Indeed, and to emphasise this point, proceedings to set aside a statutory demand are specifically identified within the Practice Directions as one of the 'routine matters' in which the Court can be expected to fix the costs payable to obviate the need for any costs assessment. I refer to PD 4.7.1 and the table at PD 4.7.1.1. Within that table, item 2.5 appears in the following terms:

1. I accept the application of PD 4.7.1 would not have been appropriate in the present matter. This matter was plainly not routine.
2. Turning then to the costs scale, the applicable scale item is item 11 of Table B of the Legal Profession (Supreme and District Courts) (Contentious Business) Costs Determination 2024, which I will refer to as the 2024 Scale. Item 11 is set out in Attachment A to these reasons.
3. Further, Table A to the 2024 Scale sets the maximum hourly and daily rates for practitioners. Counsel's hourly and daily rates are $528 and $5,280, where counsel is not senior counsel. The hourly rate for a senior practitioner is $572.
4. Having regard to item 11 and the rates in Table A to the 2024 Scale, the scale would allow recovery of costs for the hearing of the plaintiff's application in July 2025, which was for a full day, in the maximum amount of $48,404. That amount is represented by:

(a) the sum of $44,400 in item 11(a)(3); and

(b) the sum of $4,004 in item 11(c), being a senior practitioner attending court to instruct counsel for 7 hours.

1. Item 10 of Table B is also relevant, according to the plaintiff. That item, which is set out in Attachment A, relates to proceedings in chambers other than proceedings to which item 11 applies. The plaintiff submitted this item was engaged in relation to the evidentiary hearing in December 2024. I will assume, without deciding, that this is the case.
2. On the assumption that item 10(a) applies to the evidentiary hearing in December 2024, the scale might also allow a further amount of $15,840, together with some additional amounts for senior practitioner attendance and for attending on the reserved decision.
3. At all events, the 2024 Scale would typically be adequate for the majority of statutory demand proceedings.
4. In the present matter, the plaintiff has filed evidence to the effect that its legal costs and disbursements, including counsel fees, are in the region of $230,000, inclusive of GST. The maximum scale allowance will therefore be insufficient to enable recovery of the plaintiff's costs.
5. Of course, that is not the correct question to ask for the purposes of s 141(3). As Allanson J observed in Aquila Steel Pty Ltd v BHP Minerals Pty Ltd,[11] the Court does not lift the limit on hourly rates simply because a party has engaged lawyers who charge at a higher rate.
6. Rather, the plaintiff must demonstrate that the amount allowed under the 2024 Scale is inadequate because of the unusual difficulty, complexity or importance of the matter - not merely because the party has chosen to spend considerably more than the scale in attending to the matter.
7. Section 141 relevantly provides:

s 141 Effect of costs determinations

(1) The following are regulated by an applicable costs determination -

(a) the taxation of bills of law practices;

(b) any other aspect of the costs charged by law practices.

...

(3) Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do any or all of the following -

(a) order the payment of costs above those fixed by the determination

(b) fix higher limits of costs than those fixed in the determination;

(c) remove limits on costs fixed in the determination;

(d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.

(4) Subsection (1) does not limit the power of a court, a judicial officer or a taxing officer of a court to determine in any particular case before that court, judicial officer or taxing officer the amount of costs allowed. (emphasis added)

1. The principles applicable to the determination of a claim for special costs under s 141(3) are those expressed by the Court of Appeal in this State in Sino Iron Pty Ltd v Mineralogy [No 2],[12] among other authorities. The Court was there dealing with the predecessor legislation. However, the current provision is in the same terms as the repealed provision.
2. Additionally, I recently summarised the principles applicable to the making of special costs orders in Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 19].[13]
3. The relevant principles are:

1. The provision operates, in effect, to give the party the opportunity to recover those costs which have been reasonably and properly incurred where, in the Court's opinion, the scale is inadequate because of the unusual difficulty, complexity or importance of the matter. These elements are to be addressed as matters of impression, rather than as matters of detailed evaluation, precision or science. 2. In general terms, the provision is protective of the party who benefits from the costs order, and serves the administration of justice, by facilitating, within the limits imposed by the statutory criteria, the operation of the general principle that a successful party is entitled to its costs of the litigation. 3. Of course, an order under s 141(3) does not, of itself, mean that the party will recover all of the costs it has incurred, or seeks from the other parties. A special costs order does not replace the process of taxation or assessment, but modifies the limits within which that process takes place. It is the task of a taxing registrar to consider the necessity for the work undertaken and to make a judgment about the remuneration required. 4. As to the statutory criteria, the Court may make an order under s 141(3) if satisfied of two things.

(a) First, that the amounts allowed under the relevant scale item are inadequate in the sense that there is a fairly arguable case that the bill of costs may tax out at an amount which is greater than the amount allowable under the scale, because of the limits expressed within the scale.
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> (b) Second, that the inadequacy of the costs allowable arises because of the unusual difficulty, complexity or importance of the matter.

1. For the purposes of assessing whether to exercise the powers conferred by s 141(3), it will not ordinarily be necessary for the Court to determine what amount should be allowed on taxation, but only whether there is a fairly arguable case that greater amount should be allowed than that which is allowable under the relevant determination. 2. Further, a special costs order will not be warranted simply by reference to the effort of the successful party, which may have been disproportionate in all of the circumstances.
2. As earlier noted, the defendant did not seek any order which would disentitle the plaintiff from recovery of its costs in this matter, by reason of any conduct on the plaintiff's part or by reference to a measure of success the defendant had in the proceedings on discrete aspects.
3. For example, the defendant was successful with respect to a proportion of the evidentiary objections it took, which were the subject of the hearing in December. The defendant also successfully resisted the second limb of the abuse of process argument, and one of the offsetting claims advanced by the plaintiff.
4. The absence of any such order does not, however, require that the Court take the plaintiff's asserted, actual costs at their highest when analysing the terms of s 141(3). The inadequacy of the scale must have a proper causal connection to the unusual difficulty or complexity or importance of the matter.
5. I accept that a proportion of the work undertaken by the plaintiff's legal team was required because of matters not connected with the unusual difficulty, complexity or importance of the application, but in order to address the plaintiff's own evidentiary difficulties. I mention in this regard the deficiencies with the First Brown Affidavit, which led to the filing of additional affidavit material by the plaintiff. I ruled that portions of the plaintiff's affidavit material were inadmissible including some attachments which were filed contrary to the restriction in s 55(4) of the SOP Act.
6. The defendant submitted as follows:[14]
   1. As to volume [of the affidavit evidence], much of it was a result of the Plaintiff's initial affidavits being inadequate or inadmissible and the need for later affidavits (whether allowed or not). This would appear to be particularly the case with both supplementary affidavit of Mr Brown and Mr Sabanovic.
   2. Much of the evidence of Mr Male and nearly all the evidence of Mr Willmott Barr (save for the consequential loss claim material that ultimately was irrelevant) involved evidence as to solvency. Arguably the most complex issue in this matter was the contest involving the admissibility of this evidence. The first hearing may well have not occurred but for this contest. In any event the determination on this issue was in favour of the Defendant.
   3. Whilst the Plaintiff asserts a breakdown of the findings as to admissibility of evidence in its submissions it is not entirely clear how these figures were arrived at. In any event;
      1. 11 of the 15 objections (by item number) to the first affidavit of Mr Brown were upheld or conceded;
      2. 5 of the 9 objections to Mr Brown's second affidavit were upheld;
      3. 7 of the 10 objections to Mr Sabanovic's affidavit dated 28 November 2024, were upheld or conceded;
      4. The Plaintiff abandoned its objections to Mr Williams' affidavit dated 12 November 2024;
      5. The Plaintiff's objections to the affidavit of Mr Male dated 12 November 2024, and which occupied a significant part of these proceedings, were ultimately unsuccessful; and
      6. As a result of the above the application to obtain orders restricting access to affidavits on the basis of a waiver of without prejudice privilege, whilst successful at the time, was based on allegations later found to be incorrect.
   4. The matters that the Plaintiff was ultimately successful on were;
      1. The duplication of proceedings point - which involved only the most basic of evidence as it was not in contest (save for the very small discrepancy in the overlap amount);
      2. The backcharge set off claim - on which very little evidence was given by either party; and
      3. The liquidated damages set off claim - which was based on the contract and an uncontested termination date.
7. In the circumstances, the defendant submitted that a significant majority of the volume that is apparent from the Court file in this matter was caused by the initial and subsequent filing of affidavit material by the plaintiff that was disallowed, which led to further material being filed. Further, a proportion of the affidavit evidence related to the 'without prejudice contest' and the 'damage to pits claim', in respect of which the defendant (not the plaintiff) was ultimately successful.
8. The defendant's submissions have some force. Nonetheless, in my view, adopting a broad brush and impressionistic approach to the issue, I am satisfied the plaintiff has sufficiently demonstrated that an order should be made in this case, at least in respect of some but not all of the items claimed. I say that for the following reasons.
9. First, I consider the plaintiff's application was unusually difficult, complex, and important to the parties. The monetary amount involved in the dispute was substantial, as I noted in the reasons, and was apparently of real commercial importance to both parties. A range of difficult legal issues were raised during the course of the matter, which required detailed responses from the plaintiff's legal team, both in relation to the evidentiary issues and the substantive legal arguments raised.
10. It will be apparent from the reasons of the Court that the matter was far from routine or a 'garden variety' application under s 459G CA. It required the legal team for the plaintiff to invest a significant amount of energy into progressing the application and into responding to the defendant's numerous contentions.
11. Second, even if I accept that a proportion of the affidavit material and work involved by the plaintiff's solicitors may be said to have an insufficient connection to the unusual difficulty, complexity or importance of the matter, and was required for other reasons, it remains the case, in my view, that the 2024 Scale items will be inadequate. That is, there will still be a fairly arguable case that a bill of costs claiming reasonable amounts for necessary or proper work undertaken, may tax out at an amount which is greater than the amount allowable under that scale because of the unusual difficulty, complexity or importance of the proceedings.
12. This assessment is possible in this case in the absence of a draft bill of costs from the plaintiff which itemises the amounts incurred by reference to the various steps and stages in the proceeding. It is possible because, as the judicial officer managing the matter, I have the real impression that a considerable amount of work was undertaken by the plaintiff's legal team to prepare and present the plaintiff's case on those core matters on which the plaintiff was successful, and on those matters where the plaintiff was required to respond to contentions raised by the defendant.
13. These matters include the issue surrounding the decision of the Court of Appeal in Diploma Construction[15] and the contention there was an abuse of process arising from parallel proceedings. Both of these matters were strongly agitated by the defendant in unsuccessfully opposing the plaintiff's application to set aside the Statutory Demand.
14. In these circumstances, the proper approach in this matter is to accede to the plaintiff's application to remove various scale limits, but to emphasise that the factual matters to which I have referred will be the subject of scrutiny by the Registrar as to the necessity for the work to be undertaken. The Registrar will be best placed to make the judgment about these matters and the quantum of the costs recovery in the circumstances, not confined by the scale limits.
15. As to the particular orders which should be made, I do not consider the entirety of the costs regime sought by the plaintiff is appropriate in the circumstances. The plaintiff has made a case for removing the limits on the daily and hourly rates in Table A of the 2024 Scale in respect of the lead practitioner and counsel engaged on the matter. Further, the maximum allowances for time or total costs in item 10(a) and items 11(a), 11(b) and 11(c) should be removed.
16. The plaintiff also sought specific orders to permit recovery for time spent by two instructing legal practitioners at the evidentiary hearing and at the substantive hearing. There is no sufficient basis for those orders to be made. Given that an experienced counsel had been engaged, I do not regard it as appropriate to expressly permit recovery of two instructors, by reason of the unusual difficulty, complexity or importance of the matter.
17. Further, the plaintiff sought similar orders to permit recovery for time spent by two instructing legal practitioners at a range of conferences which were held in the matter, as described in item 27 of the 2024 Scale. I do not have evidence before me of the number or timing of the particular conferences in respect of which the plaintiff proposes to claim costs. The terms of item 27 are set out in Attachment A. The item permits allowances for conferral between opposing practitioners where required (such as conferrals required by reason of O 59 r 9 RSC or to discuss evidentiary objections), as well as conferences between an instructing solicitor and counsel engaged on their client's behalf. As an aside, the item could benefit from tighter drafting in its next iteration.
18. As Deputy Registrar Harman explained in Willmott v Coles Group Ltd,[16] the scope of item 27 has expanded over time. The item, as it appeared in the scale published in 1996, was initially confined to 'pretrial, mediation or other conferences - required by order of the Court, by the Rules of the Supreme Court or by the Practice Directions'.[17] It has evolved since then to include informal conferences, as appears in the scales published in 2002[18] and 2010.[19] It should also be remembered, when analysing its terms, that the item will apply in respect of solicitor and own client costs assessments.
19. With one exception, I do not consider it is appropriate within the orders to expressly permit recovery for two instructing legal practitioners, whether in terms of preparation or attendance. It is sufficient that the other limits including hourly rates are to be removed. That is, I do not accept that the orders should expressly remove the scale limit as to the number of practitioners involved at the various conferences, as that is simply not justified by the unusual difficulty, complexity or importance of the matter.
20. The exception is with respect to formal conferences between the parties as required by an order of the Court, or by the Rules, or a practice direction (which is the subject of item 27(a)), and which will include conferences between the parties to discuss evidentiary objections which were the subject of the evidentiary hearing on 19 December 2024. I accept this is appropriate in a case such as this. But, on the material before me, the same cannot be said with respect to other conferences, such as conferences between counsel and instructing solicitors or informal conference between the parties. The costs of counsel and one instructing practitioner ought be sufficient, even in the circumstances of this case, and is not justified by reason of the unusual difficulty, complexity or importance of the matter.

1. For the reasons which follow, I will order as follows:

1. The defendant is to pay the plaintiff's costs of the proceedings, including reserved costs and the costs of the hearings on both 6 August 2025 and 8 August 2025, to be assessed if not agreed. 2. Pursuant to s 141(3) of the Uniform Law, the plaintiff's costs are to be assessed without regard to the limits on the daily and hourly rates in Table A at cl 12 and 13 of the Legal Profession (Supreme Court) (Contentious Business) Determination 2024 (WA) (2024 Scale) for:

(a) Senior Practitioner (Adam Spitz); and
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> (b) Counsel (Michael Collins).

1. Pursuant to s 141(3) of the Uniform Law, the plaintiff's costs incurred in respect of the preparation for, and attendance at, the evidentiary hearing on 19 December 2024, are to be assessed without regard to the limits imposed by item 10(a) of Table B to the 2024 Scale, as to the maximum allowances for time or total costs, but confined to the costs of counsel and one instructing legal practitioner. 2. Pursuant to s 141(3) of the Uniform Law, the plaintiff's costs incurred in respect of the preparation for, and attendance at, the substantive hearing on 16 July 2025, are to be assessed without regard to the limits imposed by items 11(a), 11(b) and 11(c) of Table B to the 2024 Scale, as to the maximum allowances for time or total costs, but confined to the costs of counsel and one instructing legal practitioner. 3. Pursuant to s 141(3) of the Uniform Law, the plaintiff's costs incurred in respect of the preparation for, and attendance at, the judgment delivery on 6 August 2025, are to be assessed so as to also permit the recovery of counsel's time attending the hearing notwithstanding item 11(e) of Table B to the 2024 Scale. 4. Pursuant to s 141(3) of the Uniform Law, the plaintiff's costs incurred in respect of attendance at conferrals required by an order of the Court, by the Rules, or by practice direction, are to be assessed under item 27(a) of the 2024 Scale so as to permit the recovery of two legal practitioners attending those conferences.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Within these reasons, I will use the definitions employed in the primary reasons.

[2] Primary reasons [8], [261] - [264] and [296].

[3] Primary reasons [10], [214], [230] and [297].

[5] Section 37(1) of the Supreme Court Act 1935 (WA) and O 66 r 1(1) RSC.

[6] Affidavit of James Jordan Allison sworn 6 August 2025.

[7] Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 19] [2025] WASC 234 [104] - [111]. The summary therein cites the statements of principles endorsed by the Court of Appeal in Ben Pelech v Royle [2020] WASCA 168 (S) and Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S).

[8] Re Malley SM; Ex Parte Gardner [2001] WASCA 83 [2] (Malcolm CJ, Owen, Parker, Wheeler and McKechnie JJ); Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40 [236] (Kenneth Martin J).

[9] Primary reasons [117] - [118] and [259] - [260].

[10] Primary reasons [267] - [277].

[11] Aquila Steel Pty Ltd v BHP Minerals Pty Ltd [2022] WASC 121 (S).

[12] Sino Iron Pty Ltd v Mineralogy [No 2] [2017] WASCA 76 (S).

[13] Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 19] [2025] WASC 234 [104] - [111]. The summary therein cites the statements of principles endorsed by the Court of Appeal in Ben Pelech v Royle [2020] WASCA 168 (S) and Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S).

[14] Defendant's submissions dated 7 August 2025 [17] - [20].

[15] Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2012] WASCA 91.

[16] Willmott v Coles Group Ltd [2023] WADC 85.

[17] Legal Profession (Supreme and District Courts) (Contentious Business) Determination 1996 (item 24).

[18] Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2002 (item 24).

[19] Legal Profession (Supreme and District Courts) (Contentious Business) Costs Determination 2010 (item 24).