SE Ware Street Dev Pty Ltd v Kwik Flo Pty Ltd (No 2)

Medium Neutral Citation: SE Ware Street Dev Pty Ltd v Kwik Flo Pty Ltd (No 2) [2025] NSWSC 1299

Hearing dates: On the papers

Date of orders: 5 November 2025

Decision date: 05 November 2025

Jurisdiction: Equity - Technology and Construction List

Before: Peden J

Decision: At [22]

Catchwords: COSTS – where plaintiff successful – where plaintiff made a Calderbank offer to settle proceedings including other claims – where plaintiff contends defendant’s conduct was an abuse of process – where plaintiff raised a late argument on which it was ultimately successful – no basis for indemnity costs – no basis for plaintiff to pay portion of defendant’s costs – costs ordered on the ordinary basis
PAYMENT OF MONEY OUT OF COURT – where plaintiff paid money into Court as ‘price of injunction’ – where plaintiff has been successful – where defendant resists payment out of Court while it appeals – no basis for money to remain in Court
INJUNCTION – no issue of principle – defendant to be restrained from enforcing SOPA determination

Legislation Cited: Building and Construction Industry Security of Payments Act 1999 (NSW)
Civil Procedure Act 2005 (NSW) s 98
Evidence Act 1995 (NSW) s 131(2)(h)
Uniform Civil Procedure Rules 2006 (NSW)

Cases Cited: Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359
Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137 at [154]
Narayan v Narayan [2022] NSWSC 1685
Parrwood Pty Ltd v Trinity Constructions (Aust) Pty Ltd [2020] NSWCA 172
SE Ware Street Dev Pty Ltd v Kwik Flo Pty Ltd [2025] NSWSC 1060
Steven Faraday v Thomas Gabor Rappaport [2007] NSWSC 253
Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111

Category: Costs

Parties: SE Ware Street Dev Pty Ltd (Plaintiff)
Kwik Flo Pty Ltd (First Defendant)
Edward Smithies (Second Defendant)

Representation: Counsel:
D Hughes with S Puttick (Plaintiff)
D Jury (solicitor) (First Defendant)
Solicitors:
Mills Oakley Lawyers (Plaintiff)
HWL Ebsworth Lawyers (First Defendant)

File Number(s): 2025/274059

Publication restriction: Nil

JUDGMENT

1. On 19 September 2025, I delivered judgment in this matter, finding that SE Ware was entitled to injunctive relief restraining Kwik Flo from taking steps to register or enforce a judgment based on a second determination of adjudication application under the Building and Construction Industry Security of Payments Act 1999 (NSW) (SOPA): SE Ware Street Dev Pty Ltd v Kwik Flo Pty Ltd [2025] NSWSC 1060 (Judgment).

2. The parties were ordered to confer on final orders giving effect to the judgment and provide submissions and evidence if there was a disagreement.

3. There is no dispute that SE Ware is entitled to an injunction in the form it proposes. The only issues in dispute are the appropriate costs order, and whether SE Ware’s funds paid into Court ought be released to it in circumstances where Kwik Flo’s appeal will be heard shortly.

Costs

4. SE Ware seeks an order for indemnity costs because it submits:

5. Any attempt by Kwik Flo to enforce the Second Determination as a judgment would be an abuse of process, which “alone justifies an order that costs be paid on the indemnity basis”; and/or

6. Kwik Flo unreasonably refused an offer of settlement.

7. Kwik Flo seeks an order that SE Ware pay its costs of the proceedings up until the date of hearing, and part of its costs of the hearing, because of a “late amendment” to SE Ware’s case. Kwik Flo accepts that it otherwise must pay SE Ware’s costs.

Was there an abuse of process that justifies an indemnity costs order?

6. The Court has a broad discretion to award costs pursuant to s 98 Civil Procedure Act 2005 (NSW) and its inherent jurisdiction. The general rule is that costs follow the event: r 42.1 Uniform Civil Procedure Rules 2006 (NSW).

7. SE Ware contends that Kwik Flo should pay its costs of the proceedings because to enforce the Second Determination as a judgment would be an abuse of process, in circumstances where that determination was found to be void.

8. SE Ware relies on Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 (Baillieu Knight Frank) in support of its argument. In that case, Powell J ordered the defendant to pay the plaintiff’s costs on an indemnity basis because his Honour found it was an abuse of process for the defendant to issue a winding up notice on a solvent company to put pressure on the company to pay a disputed debt. Powell J held at 363 that the proceedings “should never have needed to be brought, and which, even when brought, should never have been fought, let alone as this one has been, to the bitter end.”

9. I do not consider that Kwik Flo’s conduct in these proceedings is analogous to that of the defendant in Bailieu Knight Frank; Kwik Flo lodged the second adjudication application with a legitimate purpose, unlike the defendant in Bailieu Knight Frank, which sought to improperly place pressure on the plaintiff to pay a contested debt. As Kwik Flo submits, it believed that it was entitled to lodge the second application, relying on the decision of Parrwood Pty Ltd v Trinity Constructions (Aust) Pty Ltd [2020] NSWCA 172 (Parrwood). Parrwood is distinguishable, at least because a first determination in that case was void, unlike here. Nevertheless, it is not appropriate to make an order for indemnity costs.

Indemnity costs because offer unreasonably refused?

10. The principles concerning Calderbank offers are well known: see eg Narayan v Narayan [2022] NSWSC 1685 (Kunc J) at [15]-[18].

11. SE Ware submits that Kwik Flo’s unreasonable rejection of its Calderbank offer entitles it to indemnity costs. In that offer, SE Ware offered to pay Kwik Flo $731,000 in exchange for release from all past, present or future claims.

12. Kwik Flo submits that the offer was to settle all controversies between the parties, not just the payment claim the subject of the Second Determination in the sum of $3,000,000, and therefore it was not unreasonable for it to reject the offer. I agree.

13. Further, the offer was open for less than 24 hours. While I accept that there was a necessarily short time frame in which the offer could be open due to the expedited nature of SOPA proceedings, the very short time frame also supports the conclusion that Kwik Flo’s rejection was not unreasonable.

14. I reject Kwik Flo’s submission that SE Ware’s tender of the offer, being ‘without prejudice save as to costs’ correspondence, is objectionable and should be rejected by the Court: see Evidence Act 1995 (NSW) s 131(2)(h).

15. Therefore, SE Ware is not entitled to indemnity costs.

Is Kwik Flo entitled to some costs because of SE Ware’s “late amendment”?

16. A party may be ordered to pay costs to the date of late amendment to a pleading where it “substantially alters the case the defendant has to meet and without which the action will fail”: Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137 at [154] (Stuart-Smith LJ); see also Steven Faraday v Thomas Gabor Rappaport [2007] NSWSC 253 at [25]ff (White J). This approach may apply where although a plaintiff has received some success by virtue of a late amendment, the ‘true victor’ of the case as a whole was the defendant. If that is not the case, the plaintiff may recover some or all of its costs: Waterman v Gerling Australia Insurance Co Pty Ltd (No 2) [2005] NSWSC 1111 (Brereton J) at [17]-[20], [26]-[27].

17. SE Ware did not amend its pleading but raised an argument orally that was not included in its written submissions. I allowed the argument after both parties were given an opportunity to provide further submissions, and SE Ware had raised the same argument during the Second Determination process, the argument was consistent with SE Ware’s pleading and Kwik Flo could not reasonably maintain that the argument caught it by surprise: Judgment at [31].

18. Kwik Flo was not the true victor of the proceeding, because SE Ware was successful in demonstrating the first determination was valid and the Second Determination ought not be enforced. Therefore, Kwik Flo is not entitled to any costs.

Release of funds

19. SE Ware seeks the release of funds it paid into Court, as the ‘price’ of obtaining an earlier injunction preventing Kwik Flo enforcing the Second Determination.

20. Kwik Flo resists this on the basis that its appeal is to be heard by the Court of Appeal on an “expedited basis”, and it will suffer prejudice, as it has yet to receive payment for works it undertook for SE Ware’s benefit. Kwik Flo contends that the funds remaining in Court is consistent with the object of SOPA and will allow it to recover the funds immediately if successful on appeal.

21. In circumstances where SE Ware paid the funds into Court to prevent Kwik Flo from enforcing the Second Determination, and has been successful, and Kwik Flo has not sought a stay of the judgment, the funds paid into Court should be released to SE Ware.

Orders

22. I make the following orders:

23. Kwik Flo be permanently restrained from doing any of the following in connection with the purported adjudication determination dated 14 July 2025 by the Second Defendant (Adjudication Reference 2025-TASC-029), including:

(a) requesting the provision of an adjudication certificate pursuant or purportedly pursuant to section 24(1) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (Act). (b) filing an adjudication certificate (or purported adjudication certificate) as a judgment for a debt in any court pursuant to section 25 of the Act; and (c) taking any steps to enforce any judgment purportedly obtained.

2. The $1,229,226.83 paid into Court by SE Ware in these proceedings be immediately paid out to SE Ware in full.
3. Pursuant to UCPR r 41.8, any interest accrued on the funds paid into Court by SE Ware in these proceedings be immediately paid out to SE Ware.
4. Kwik Flo is to pay SE Ware’s costs on the ordinary basis as agreed or assessed.

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