The Owners – Strata Plan 93105 v Richard Crookes Constructions Pty Ltd

Medium Neutral Citation: The Owners – Strata Plan 93105 v Richard Crookes Constructions Pty Ltd [2025] NSWSC 935

Hearing dates: On the papers

Date of orders: 18 August 2025

Decision date: 18 August 2025

Jurisdiction: Equity - Technology and Construction List

Before: Peden J

Decision: See [26]

Catchwords: COSTS — Application for costs to be fixed in a gross sum — Appropriateness of gross sum costs order – Sufficiency of evidence required for gross sum costs orders – Where parties scheduled to participate in mediation – Where mediation terminated upon failure of plaintiff’s personal representative to attend – Where defendants’ evidence of wholly and partly wasted costs inconsistent and unexplained – Whether plaintiff should bear defendants’ costs of failed mediation – Whether costs ought to be awarded on gross sum basis – Plaintiff to pay defendants’ costs – Costs to be agreed or assessed – No issue of principle

Legislation Cited: Civil Procedure Act 2005 (NSW) ss 26, 98

Cases Cited: Hamod v New South Wales [2011] NSWCA 375
Harrison v Schipp (2002) 54 NSWLR 738
Manariti Plumbing Pty Ltd v University Property Group Pty Ltd (No 2) [2025] NSWCA 185
WLD Practice Holdings Pty Ltd v Stockham [2020] NSWSC 1354

Category: Costs

Parties: The Owners – Strata Plan 93105 (Plaintiff)
Richard Crookes Constructions Pty Ltd (First Defendant)
Erskin FCP Pty Ltd (Second Defendant)

Representation: Counsel:
NYH Li (Plaintiff)
Solicitors:
Kerin Benson Lawyers (Plaintiff)
Colin Biggers & Paisley (Defendants)

File Number(s): 2022/00172260

Publication restriction: Nil

JUDGMENT

1. The plaintiff Owners Corporation has brought proceedings against the defendant builders and developers, concerning the installation of aluminium composite cladding used in the construction of the Owners Corporation’s common property about nine years ago.

2. On 28 March 2025, Stevenson J ordered the parties to attend mediation pursuant to s 26(1) Civil Procedure Act 2005 (NSW) (CPA). The mediation scheduled on 2 July 2025 was terminated by the mediator. While the Owners Corporation’s solicitor and counsel attended, its personal representative did not.

3. The defendants now seek an order that the Owners Corporation pay their costs of the aborted mediation on a gross sum basis. The Owners Corporation resisted such an order, submitting that it participated in the mediation, through its legal representatives, “in good faith”, and it was not responsible for the mediation being unable to proceed, in circumstances where its personal representative was available by telephone to “provide instructions”.

4. I ordered that the defendants’ application for a gross sum costs order be determined on the papers.

5. For the reasons that follow, I consider the defendants are entitled to their costs of, and related to, the aborted mediation. However, I do not consider that these should be awarded on a gross sum basis. Instead, as in the ordinary course, the costs of the proceedings are to be determined upon a costs assessment.

Ought the plaintiff pay the defendants’ costs of the mediation?

6. Primarily, the defendants contended that the Owners Corporation caused it entirely to waste its expenditure in “obtaining orders for the mediation, the preliminary conference and attending the mediation itself”, and partly to waste its expenditure of “preparing for the mediation”, in circumstances where its personal representative failed to attend the mediation in person or via video conference. Whether, in fact, the Owners Corporation failed to “appear” at the mediation is a matter in dispute.

7. For its part, the Owners Corporation identified six reasons why an attendance by its personal representative would have been otiose:

8. its legal representatives were attending the mediation;

9. it participated in “good faith” in the mediation process, including by conferring with its legal representatives and instructing them to confer with expert witnesses;

10. its personal representative was available by telephone “to provide instructions by telephone”;

11. insofar as the installation the subject of the dispute pre-dated its incorporation, none of its “natural person delegates would have had personal knowledge of any of the matters giving rise to the issues in dispute”;

12. its expert witnesses were in attendance remotely, and the issues in dispute turned primarily on expert evidence; and

13. being an owners corporation, “settlement of legal proceedings [would be] ratified by the Owners at general meeting”.

14. The Owners Corporation submitted that the absence of a personal representative at the mediation was, for these reasons, “unlikely to have a material effect on the conduct of the mediation”.

15. On 2 July 2025, the mediator, the defendants’ solicitors, representatives of the defendants and their experts, as well as the Owners Corporation’s solicitors and counsel attended the defendants’ solicitors’ office. Although the Owners Corporation asserted that its experts were available to attend the mediation via AVL, the mediator made no reference to this in her email explaining the termination of the mediation on that day, which included:

1. At the pre-mediation conference on 23 June 2025, I requested the parties to provide their position papers and questions, and the names of those people who would be attending the mediation, by 30 June 2025. The Defendants complied with that request. The Plaintiff did not.

2. Yesterday, 1 July 2025, the Plaintiff provided its position paper and questions. The Plaintiffs solicitor informed me by email at 14.06 that a representative from the Plaintiff’s committee would attend the mediation and the identity of that representative would be provided shortly. No such details were in fact provided.

3. Today, we convened as planned at the office of the Defendants' solicitors, at 9am, to mediate. The Defendants attended in person by solicitors, representatives of the Defendants and experts. The Plaintiff’s solicitor and Counsel attended but nobody attended on behalf the Plaintiff.

4. The Plaintiffs solicitor and Counsel made efforts to contact the Plaintiff and have a representative attend the mediation. Unfortunately, those efforts were unsuccessful and no representative of the Plaintiff was available to attend the mediation either in person or by AVL.

5. Accordingly, the mediation was not able to proceed.

10. The Owners Corporation has not suggested that the mediator’s email misstated what occurred and I have no reason to doubt that the Owners Corporation failed to properly engage in the preliminary steps for the mediation, and failed to have any person attend on its behalf, whether in person or by AVL. It also appears that the Owners Corporation’s representative was not available at all when instructions were sought during the preliminary parts of the mediation. The mediator did not record that the Owners Corporation’s experts were available for discussions with the defendants’ experts. Further, it was not suggested that the mediator ought not to have terminated the mediation in the circumstances.

11. I do not accept the Owners Corporation’s submission that the mediation ought to have continued without its personal representative, on the basis that any settlement would have required a general meeting in any event. An in-principle settlement agreement could conceivably have been reached. Further, the representative would have been in a better position to explain the mediation and any in-principle agreement to a general meeting.

12. Another mediation has been ordered, and the defendants have suffered wasted costs that ought to be paid by the Owners Corporation.

Is a gross sum costs order appropriate?

13. The principles concerning the discretion to award a gross sum costs order under s 98(4)(c) CPA are well known: see, eg, Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] (Beazley JA, as her Excellency then was, with whom Giles and Whealy JJA agreed) (Hamod). Factors relevant to the exercise of the discretion include the capacity of the unsuccessful party to satisfy any costs liability, the complexity of the proceedings in relation to their cost, and the desirability to avoid the expense and delay associated with a contested costs assessment: Hamod at [816]-[817]. The Court may adopt a "broad brush" approach to quantification: Harrison v Schipp (2002) 54 NSWLR 738 at 743 (Giles JA). That may involve an "impressionistic discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment": Hamod at [820].

14. As the Court of Appeal has recently observed, the Court’s discretion to make an order under s 98(4) is “unconfined”: Manariti Plumbing Pty Ltd v Universal Property Group Pty Ltd (No 2) [2025] NSWCA 185 at [46] (Free JA, Ball and McHugh JJA agreeing). However, where a party cannot point to any particular circumstance of their case that warrants the making of a gross sum costs order, whether or not of the kind previously considered appropriate to warrant the making of such an order, it may be appropriate for the matter to proceed to costs assessment: Manariti at [46]. Here, the defendants have not identified any particular matter that warrants the making of a gross sum costs order.

15. I accept that directing the parties to participate in a costs assessment process could cause the parties to incur additional costs. However, there is no reason to think that a costs assessment process, involving a small sum of money relating to a specific time period and event, would be protracted or cause undue delay to the proceedings or the next mediation.

16. Therefore, I do not consider that this is an appropriate case in which to make an order for a gross sum costs order.

Insufficient evidence before the Court

17. In any event, I do not consider that the defendants’ evidence would allow the Court to come to an informed view on the appropriate quantum of any gross sum. A Court considering an application for gross sum costs is not required to undertake a detailed examination process akin to a formal costs assessment. Indeed, to require such would defeat the purpose of a gross sum costs order: Manariti at [34] (Free JA). Below I point out a few deficiencies.

18. The defendants seek costs of $16,000, payable forthwith, comprised of costs they consider “wholly thrown away” and “partly thrown away”:

19. the full amount of their costs “wholly thrown away” of obtaining the initial order for mediation at the directions hearing on 28 March 2025, attending the preliminary conference on 23 June and the mediation on 2 July 2025; and

20. 25% of their costs of preparing for the mediation, being costs “partly thrown away”.

21. The defendants’ solicitor, Mr James Neal, sought to explain the quantum of costs sought. He provided invoices of two experts, who prepared for and attended the mediation, and the mediator’s invoice. He provided details of the defendants’ lawyers involved, their hourly rates, and time charged. However, the table annexed to Mr Neal’s affidavit, outlining these costs, appears to contain several internal inconsistencies. On page 19, a table provides:

| Total fees and disbursements 100% thrown away | $14,358.71 | | Total fees and disbursements partially thrown away (assume 25%) | $6,905.12 | | TOTAL | $21,263.84 |

20. On page 20, a different table provides:

| Total fees and disbursements 100% thrown away | $14,358.71 | | Total fees and disbursements partially thrown away (assume 25%) | $6,905.12 | | Total fees (costs of preparing Affidavit of J Neal) | $9,734.00 | | TOTAL GROSS SUM COSTS ORDER | $16,639.13 |

21. The total sum of the figures displayed in the table on page 20 is $30,997.83 and not the $16,639.13 displayed. It is unclear whether this is due to a calculation error or because Mr Neal has applied some kind of discount. His affidavit does not explain this. Mr Neal states that he calculated the costs in “a logical, fair and reasonable manner and deductions have been applied to ensure costs have not been overestimated” and that he “sought to estimate on a broad-brush approach”. However, that does not explain the confusing inconsistencies.

22. Additionally, on page 19, the whole of the mediator’s fee, being $3,000, is sought as a disbursement 100% thrown away. However, the invoice issued by the mediator to the defendants shows that the defendants are only liable for two thirds of the invoice, being $2,000. It is not apparent whether the defendants paid the whole invoice and are seeking reimbursement from the Owners Corporation or if the defendants are overclaiming the amount they were required to pay to the mediation agreement.

23. Further, the Owners Corporation identified what it considered duplicated work in the sum of $1,774.00.

24. The defendants have rounded down the total sum being sought from $16,639.13 to $16,000, but as noted above, they do not state they have otherwise applied any discount, despite that usually being appropriate: WLD Practice Holdings Pty Ltd v Stockham [2020] NSWSC 1354 at [11] (Sackar J).

25. In the circumstances, I do not have sufficient confidence that a gross sum costs order would be fair to all parties, and the materials available do not enable me to determine an appropriate sum. Instead, an expert assessor can engage with the submissions and detail: see, eg, Manariti at [48]-[49] (Free JA).

Orders

26. For the reasons above, I make the following orders:

27. The plaintiff is to pay the defendants’ costs of and incidental to the mediation on 2 July 2025, as agreed or assessed.

28. The defendants’ application is otherwise dismissed.

**********