Liangis v IPEX ITG Pty Ltd [2005] ACTCA 28

1. On 15 February 2005 the Court of Appeal upheld the appeal in this matter, set aside the orders of the primary judge and ordered that the appeal from the Magistrate's Court be allowed to the extent of reducing the judgment sum from $292,275.00 to $146,253.30. The parties were granted liberty to file written submissions concerning the remaining issue of whether the order made in the Magistrates Court requiring the appellant to pay two-thirds of the respondent's costs should be reconsidered.

2. The submissions filed on behalf of the appellant have now referred to an offer by the appellant to carry out rectification work in order to bring the air conditioning equipment, which was the subject of the dispute between the parties, up to the standard required by the contract between them. The offer was made well prior to the hearing but the respondent declined to accept it or, indeed, to settle for anything less than a system that suited its then current business needs. The learned magistrate's impression as to the adequacy of this offer, and hence as to the extent to which the parties had behaved reasonably, had clearly been coloured by his view that the respondent had been entitled to such a system. Since it has now been held that the respondent had no such entitlement under the contract, the issue should be reconsidered. Whilst conceding that allowance should be made for costs incurred by the respondent before the offer was made and for certain aspects of the appellant's conduct which the magistrate criticised, it is contended that the respondent's unreasonable failure to accept the offer caused the appellant to unnecessarily incur very substantial costs. Hence, the existing order should be set aside and, in lieu thereof, the respondent ordered to pay two-thirds of the appellant's costs.

3. On the other hand, the submissions filed on behalf of the respondent assert that the existing order should not be set aside. No appealable error has been demonstrated in relation to that order and it "bears no relationship" to the issues upon which the appellant succeeded on appeal. The respondent had not been able to accept the offer referred to in the appellant's submissions because what had been proposed was only an "in-principle system" which was never augmented by design specifications or drawings and did not take into account the need to upgrade the electrical system. Furthermore, the respondent had earlier urged the appellant to resolve the matter without recourse to litigation and suggested arbitration by an independent engineer.