Pacific General Securities Ltd & Anor v Soliman & Sons Pty Ltd & Ors [2006] NSWSC 724 | Case summary

5734/05 Pacific General Securities Ltd & Anor v Soliman & Sons Pty Ltd & Ors JUDGMENT 1 HIS HONOUR: On 31 January 2006 I delivered judgment and made orders declaring the determination of the third defendant adjudicator void, restraining the first defendant builder from requesting the second defendant nominating authority to provide an adjudication certificate, restraining the second defendant from providing an adjudication certificate, and making no order as to costs, to the intent that each party bear its own costs [Pacific General Securities Limited v Soliman & Sons Pty Limited [2006] NSWSC 13]. I explained my reasoning for (provisionally) making no order as to costs, as follows [at [100]]: Although the plaintiff has succeeded, it failed on all but one of the grounds it advanced. Had it relied only on the ground on which it succeeded, the scope of the case and the evidence would have been very much reduced. While costs ordinarily follow the event, and I am conscious that it is exceptional for the Court to apportion costs having regard to the partial success of a party, it may do so where an issue is severable and distinct. In this case, the plaintiff succeeded on an issue which occupied little of the argument and would have required only the adjudication to be put into evidence. It failed on all others. Although I shall reserve leave to the parties to apply for a different costs order, prima facie the parties should be left to bear their own costs. 2 However, I reserved leave to each party to apply, by written submission lodged and served within seven days, for a costs order notwithstanding that order, and made further directions contingent upon any such application being made for its determination on written submissions. 3 On 7 February 2006, new solicitors advised they had been retained by the plaintiffs, and had only recently been retained to act and were still obtaining necessary instructions. They sought an extension to Tuesday 14 February 2006 for the making of a costs application. On 17 February 2006, counsel for the plaintiffs lodged and a submission, which included an application for an extension of time for making the application and an application for an order that the defendants pay the plaintiffs' costs, or alternatively pay 50% of the plaintiffs' costs. 4 No responsive submission has been received from any of the defendants or their solicitors. It does not appear that the present application was served on any defendant other than Soliman. Only the first defendant, Soliman, was an active contradictor in the proceedings. The second and third defendants filed submitting appearances. In any event, there is no basis for making a costs order against those defendants, who submitted. 5 On 27 February 2006 the plaintiffs' solicitors informed the court that Soliman was placed into administration on 17 February 2006, a matter of which they became aware on 22 February 2006, and that the first creditors' meeting was held on Friday 24 February 2006. The court has not been informed of any further developments so far as the administration is concerned. 6 The appointment of an administrator has the effect that a proceeding in a court against the company (or in relation to any of its property) cannot be proceeded with, except with the administrator's written consent, or with the leave of the court and in accordance with such terms (if any) as the court imposes. However, as I have concluded, for reasons which follow, that upon assumption that time for the plaintiffs' application should be extended and that leave to proceed should be granted, the application would nonetheless ultimately fail, it is possible to dispose of the matter without further notice to the administrator. 7 The cause for the delay in filing the plaintiffs' submissions regarding costs was their decision to change solicitors. One practical consequence of such a course is that new solicitors must obtain instructions and documents and familiarise themselves with the matters. The new solicitors notified the court and the solicitors for Soliman of their intention to seek an extension of time within the time originally limited for making the application. The extension sought is a short one, ten days. The submissions in relation to costs were lodged and served with the application for an extension of time. No prejudice to Soliman from granting an extension is apparent. If there were utility in doing so, I would extend the time limited by Order 5 made on 31 January 2005 for the plaintiff to lodge submissions in respect of costs up to and including 17 February 2006. 8 The plaintiffs have not expressly sought leave under Corporations Act 2001 (Cth), s 440D(1)(b) to proceed, notwithstanding that Soliman is in liquidation. It would not be appropriate to grant such leave without affording the administrator an opportunity to be heard. However, given that the substantive proceedings have been completed and a costs order already made albeit with leave to apply to vary it, there is prima facie a strong case for the grant of such leave. I will proceed on the assumption, without deciding, that if it were sought and there were utility in granting it, I would grant leave to proceed. 9 In support of the application for a costs order, the plaintiffs refer to the general rule that costs follow the event, conceding that the court's discretion in respect of costs is to be exercised in accordance with the justice of the particular case, having regard to "whether or not it would be more fair as between the parties that some exception should be made to the general rule" [Cates v Glass [1920] NZLR 37, 68]. The plaintiffs submit that they were ultimately successful, and obtained the relief that they sought at the outset and on the legal basis originally articulated. 10 The starting point is that the plaintiffs, having been successful, are entitled to their costs, unless there is a reason for departing from that position. A successful plaintiff who has failed on certain issues may be deprived of costs on those issues, or even ordered to pay the defendant's costs of them, but this is a course on which the court embarks with hesitancy. Justice may not be served if parties are dissuaded by the risks of costs from canvassing all issues which might be material to the decision in the case, but it may be appropriate to award costs of a separate issue where a clearly definable and severable issue, on which the otherwise successful party failed, has occupied a significant part of the trial [Waterman v Gerling Australia Insurance Co Ltd (Costs) [2005] NSWSC 1111, [10]]. 11 The plaintiffs submit that it was appropriate for them to press all six grounds that they advanced to impugn the adjudicator's termination, and that in doing so they did not occasion unnecessary litigation or expense, nor prolong the proceedings. They submit that it was incumbent on them to advance every ground that might be material to a decision in the case upon which they had reasonable prospects of success. Although I think this overstates the test - in that it does not follow that a successful plaintiff may advance and fail on whatever relevant grounds have reasonable prospects, without risk as to costs, I am content to adopt it for present purposes. In my judgment the plaintiffs fail that test, because the grounds on which they failed did not have reasonable prospects of success. 12 The first unsuccessful ground was that the plaintiffs contended that there was non-compliance with a basic and essential requirement prescribed in the Act for there to be a valid determination, in that the payment claim was not made within twelve months of performance of the latest of the construction work to which it related. That submission not only failed on the facts, but was contrary to two decisions of this court, in the face of which it had no prospects of success. 13 The second unsuccessful ground was that there was non-compliance with a basic and essential requirement prescribed in the Act for there to be a valid determination, in that the payment claim did not sufficiently specify the construction work in respect of which it was made. In the light of previous authority that such a defect did not nullify a payment claim, and given that on the face of the payment claim the "period" to which it referred was plain, and Mr Dixon's concession that he understood precisely what was being claimed, this ground was hopeless and unmeritorious. 14 The third unsuccessful ground was that there was non-compliance with a basic and essential requirement prescribed in the Act for there to be a valid determination, and/or a denial of natural justice, in that the adjudication application was not validly served on Finmore, insofar as Finmore's receiver was not served. Counsel was unable to refer to any authority to support this proposition. And Finmore's sole director and directing mind, Mr Dixon, conceded that he had actual notice of the application. The ground was entirely unmeritorious. 15 The fourth ground which failed was that there was non-compliance with a basic and essential requirement prescribed in the Act for there to be a valid determination, in that the adjudicator did not have regard to certain of the submissions contained in the adjudication response. The submissions to which the adjudicator did not have regard were plainly outside the ambit of the relevant payment schedule. The only basis on which it was suggested that the issues had been raised in the relevant payment schedule was that the payment schedule was said to have incorporated reasons that had previously been advanced for withholding payment, in a response to an earlier adjudication application. I do not think that proposition was seriously arguable. 16 Finally, the plaintiffs submitted that the court should as a matter of discretion restrain Soliman from prosecuting its adjudication claim, pending resolution of proceedings in the Technology and Construction List. I concluded that there was no basis for restraining further prosecution of the adjudication application. The case was far removed from the authority in which such relief had been contemplated. This, too, was not seriously arguable. 17 In short, the grounds that the plaintiffs advanced unsuccessfully were not grounds on which they had reasonable prospects of success. On the ground on which the plaintiffs did succeed, their written submissions at the hearing occupied two paragraphs of thirty-eight, or half a page of six-and-a-half pages. The authority on which the plaintiffs succeeded was not cited in those submissions, nor otherwise, by the plaintiff. Soliman was put to the costs of defending five grounds that were hopeless. The plaintiffs incurred little costs in respect of the one ground on which they ultimately succeeded. In my view it would be unjust for Soliman, in those circumstances, to have to pay any part of the plaintiffs' costs. 18 For those reasons, upon assumption that time to make the application were extended and that leave to proceed were granted, I would decline to vary Order 4 made on 31 January 2006, and dismiss the application contained in the plaintiff's written submissions dated 17 January 2006. In the light of the current status of Soliman, however, the more convenient procedural course is that I simply decline to extend time for making that application, on the grounds that there is no utility in doing so, because Soliman is in administration and even if leave to proceed were granted, the application would fail. 19 Accordingly, I dismiss the plaintiff's application for an extension of time within which to make the application referred to in Order 5 of 31 January 2006. **********

Pacific General Securities Ltd & Anor v Soliman & Sons Pty Ltd & Ors

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