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  4. Hestbay Pty Ltd v One Sector Pty Ltd - [2023] QSC 154

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Hestbay Pty Ltd v One Sector Pty Ltd[2023] QSC 154

Reported at (2023) 15 QR 319

Hestbay Pty Ltd v One Sector Pty Ltd[2023] QSC 154

Reported at (2023) 15 QR 319

SUPREME COURT OF QUEENSLAND

CITATION:

Hestbay Pty Ltd v One Sector Pty Ltd [2023] QSC 154

PARTIES:

HESTBAY PTY LTD (ACN 010 851 073) AS TRUSTEE FOR THE J & F PROPERTY TRUST

(plaintiff)

v

ONE SECTOR PTY LTD (ACN 139 990 891)

(defendant)

AND

EXCEL CONCRETE PTY LTD (ACN 010 891 773)

FILE NO:

9563/21

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court

DELIVERED ON:

14 July 2023

DELIVERED AT:

Brisbane

HEARING DATE:

14 June 2023

JUDGE:

Freeburn J

ORDER:

  1. The costs of the third party proceedings be reserved.
  2. The parties be heard on the costs of the application.

CATCHWORDS:

PROCEDURE – COSTS –  DISCONTINUANCE OR WITHDRAWAL FROM PROCEEDING – where the plaintiff is the owner of an industrial property – where the defendant was retained to design and construct a building on the industrial land – where the plaintiff alleges in their statement of claim that the concrete laid by the defendant does not meet the requisite strength – where the defendant issued a third party notice to the concrete supplier – where the defendant was given leave to discontinue proceedings against the third party after expert evidence was obtained – where the plaintiff and the third party seek an order that the defendant pay the third party’s costs – where the defendant argues that the costs of the third party proceeding be reserved – whether the defendant has surrendered their position against the third party and are required to pay their costs – whether the defendant acted reasonably in joining the third party – whether the third party will suffer prejudice if a costs order is not awarded before trial

Authorities

Uniform Civil Procedure Rules 1999 r 307, 681

Brown v Parker [1961] WAR 194

Covell Matthews & Partners v French Wools Ltd [1997] 2 All ER 591

Fairfield Services Pty Ltd (in liquidation) v Leggatt [2020] QR 50

Fox v Star Newspaper Co Ltd [1900] AC 19

Fuller v Toms [2010] QCA 283

Furber v Stacey [2005] NSWCA 242

GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 688

Gold Coast Bakeries (Qld) Pty Ltd v Heat and Control Pty Ltd [1992] 1 Qd R 162

JT Stratford & Son Ltd v Lindley (No 2) [1969] 1 WLR 1547

Paron v Fry (No 2) [1990] 1 Qd R 550

Rathie v ING Life Ltd [2003] QSC 429

Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622

Swisstex Finance Pty Ltd v Lamb [1993] Qd R 463

Thomas v Times Book Company Ltd [1966] 1 WLR 911

COUNSEL:

S Whitten and C Matthews for the plaintiff

A Greinke with S Lamb for the defendant

P Franco KC for the third party

SOLICITORS:

Hickey Lawyers for the plaintiff

Doyles Construction Lawyers for the defendant

Wotton + Kearney Lawyers for the third party

REASONS

  1. [1]
    On 4 May 2023 I gave the defendant leave to discontinue the third party proceedings.  Pursuant to rule 307(2) of the Uniform Civil Procedure Rules 1999 (UCPR) the court may make the order for costs that it considers appropriate.  The third party seeks a costs order against the defendant. The plaintiff supports the third party’s application for costs.
  2. [2]
    Here, in order to arrive at the appropriate costs order for the third party proceedings, it is necessary to delve into the facts of the dispute.
  3. [3]
    The plaintiff, Hestbay Pty Ltd, is the owner of land at 27-29 Industrial Avenue, Molendinar.  As the address suggests, the land is industrial land.  On 10 July 2015 Hestbay retained the defendant, One Sector Pty Ltd, to design and construct a building on that industrial land. On 19 August 2021 the plaintiff commenced this proceeding against the defendant alleging breach of the design and construct contract.

The Primary Claim

  1. [4]
    It is necessary to explain the nature of the plaintiff’s case against the defendant.  The plaintiff points to the contractual documents as requiring internal slabs of 175mm thickness with 32Mpa strength concrete.[1]  The specifications required “grade N32 concrete”.  According to the statement of claim, that was the defendant’s obligation under the contract.
  2. [5]
    The breach of contract alleged by the plaintiff was as follows:
  1. 21.
    In breach of the Defendant’s obligations under the Contract, as pleaded in paragraphs 8(b) to (g) and 17 above:
  1. (a)
    the Internal Concrete Slabs constructed by the Defendant did not meet the Concrete Specifications in the following respects:
  1. (i)
    it did not have a thickness of equal to or greater than 175mm across the entire area of the slab;
  1. (ii)
    it had a maximum compressive strength of 29.1Mpa;
  1. (iii)
    it otherwise had varied compressive strength across the slab, with an average compressive strength of 23.35Mpa; and
  1. (iv)
    it had cover to reinforcement ranging from 30mm to 80mm cover.
  1. (b)
    the Defendant did not carry out the Works using proper and tradesman like workmanship;
  1. (c)
    the Defendant did not carry out the Works with due skill, care and diligence; and
  1. (d)
    the Defendant did not complete the Works so that they were fit for purpose.
  1. [6]
    And so, in summary, the breaches alleged were that the concrete slabs were too thin and too weak.  As to the latter, the plaintiff’s case was that the concrete strength possessed a maximum of 29.1Mpa and an average strength of 23.35Mpa.
  2. [7]
    It is important to note that the allegation that the concrete was too weak was merely an allegation that the contract specifications required 32Mpa and yet what was supplied was concrete with a strength which averaged only 23.35Mpa.  In other words, the pleading merely specified that the contract required a particular outcome.  I do not say that as a criticism.  It is merely to explain that the pleading does not descend into detail as to what went wrong or why the slab was under-strength.
  3. [8]
    Even the concurrent negligence claim (made at paragraphs 23-27 of the statement of claim) does not descend into detail as to what caused the concrete to be laid at less than the specified strength.  Of course, there are numerous possibilities.  The concrete supplier may have supplied a mix that was understrength, or there may have been a problem with the transportation to the site, or the workmanship in laying the concrete may have been faulty.
  4. [9]
    Those various possibilities are at the heart of the present problem.

The Third Party Claim

  1. [10]
    On 18 October 2021, the defendant issued a third party notice directed to the concrete supplier, Excel Concrete Pty Ltd.  The defendant’s third party statement of claim adopts a similar stance to the plaintiff’s statement of claim:
  1. 5.
    The quality of the concrete ordered by the defendant for the Project was ‘N32’, referring to standard concrete with a compressive strength of 32 Mpa.
  1. 6.
    Accordingly, there was an express warranty that the concrete would have a compressive strength of 32 MPa.
  1. 7.
    Expressly or by implication, the defendant made known to the third party the particular purpose for which the concrete was required, namely for floor slabs with a compressive strength of 32 MPa.
  1. [11]
    The third party statement of claim continued:
  1. 13.
    By paragraph 21 of its statement of claim, the plaintiff alleges that:
  1. (a)
    the internal concrete slabs for the Project had a maximum compressive strength of 29.1 MPa; and
  1. (b)
    otherwise had varied compressive strength across the slabs, with an average compressive strength of 23.35 MPa;
  1. (c)
    hence the compressive strength of the concrete was less than 32 MPa.
  1. 14.
    If, as alleged by the plaintiff, the concrete supplied by the third party did not have compressive strength of 32 MPa, then the third party:
  1. (a)
    breached the express warranty that the concrete would have a compressive strength of 32 MPa;
  1. (b)
    breach the implied warranty that the concrete would be fit for purpose of maintaining a compressive strength of 32 MPa;
  1. (c)
    breached clause 52 since the concrete supplied was not ‘N32’ quality;
  1. (d)
    breached clause 52 since the concrete was not of acceptable quality in that the concrete:
  1. (i)
    was not fit for purpose of a compressive strength of 32 MPa;
  1. (ii)
    was defective; and
  1. (iii)
    was not durable.
  1. [12]
    In that way, the defendant adopted the plaintiff’s allegations. However, the defendant’s adoption of the plaintiff’s allegations was less than wholehearted.  At the time it issued the third party notice, the defendant’s solicitors wrote to the third party in these terms:

“The Principal alleges that the concrete failed to achieve a compressive strength of 29.1 MPa and has varied compressive strength across the slab, with an average compressive strength of 23.35 MPa (see in particular paragraph 21), which caused damage to the slabs including cracking and disintegration (paragraph 22).

The Principal has obtained expert reports from the following, copies of which are enclosed:

  1. 1.
    Structural Diagnostics Pty Ltd;
  1. 2.
    Griffith University; and
  1. 3.
    Edge Consulting.

We do not necessarily accept the results of the testing or the accuracy of the reports and we are carrying out further investigations as to the Principal’s allegations.  We are also seeking proper access to the premises for recording the loads applied and the performance of the concrete.

Our client has carried out the works in an appropriate and skilful way and has denied all liability in the Supreme Court proceeding.  If, however, the compressive strength of the concrete was less than 32 MPa and otherwise non-compliant with AS 1379, as claimed by the Principal, then as the supplier of the concrete our clients holds you liable for the damages.

In light of the above, you are on notice that our client intends to join you to the proceedings. [emphasis added]

  1. [13]
    The third party filed a defence to the defendant’s third party statement of claim.  Essentially, the third party defended on the basis that it delivered to site concrete having a strength grade of N32.

Expert Evidence

  1. [14]
    The three expert reports obtained by the plaintiff to support its claim comprise a report of Structural Diagnostics dated 27 April 2020, a Griffith University report dated June 2020, and a report from Edge Consulting Engineers dated 23 July 2020.
  2. [15]
    The Structural Diagnostics report is self-described as a “first impressions” report.  It was limited to non-invasive visual observations.  The report observes:

“Based on visual observation of existing surface wear, and additional surface defects presented in below, it is our opinion that the specified design compressive strength of 32 MPa for the wearing surface is unlikely to have been achieved at various locations within the tenancy.”

  1. [16]
    Of course, the surface wear may not necessarily be caused by below strength concrete.  The tentative conclusion reached is as follows:

“Observed defects are consistent with poor placement, compaction, finishing or curing of the concrete slabs.  Adequate consideration during slab placement including wind speed, ambient temperature and relative humidity is also necessary, especially when considering surface layer integrity.  It is likely that these factors also contributed to the concrete defects and may not have been sufficiently addressed at the time of casting.” [emphasis added]

  1. [17]
    That, of course, merely identifies the potential causes of the problems.  The report recommends further steps to verify the compressive strength of the concrete.
  2. [18]
    The Griffith University report tested the strength of 10 concrete core samples.  The average strength of the core samples was 23.9Mpa. 
  3. [19]
    Edge Consulting Engineers, who engaged Griffith University, relied on the other reports and concluded that all cores were below the design concrete grade of 32 mpa, and that the “as built” slab does not meet the design specifications, and that the concrete quality and strength is not fit for purpose and needs to be replaced.
  4. [20]
    During the course of the proceeding the pleadings have been amended (by all parties) and further expert evidence has been obtained. That further expert evidence was not before me on this application, and no party referred me to that evidence.
  5. [21]
    The trial, now involving only the principal claim by Hestbay against One Sector, is set down for 10 days in October. There is to be a mediation between now and then.

The Context

  1. [22]
    The third party seeks an order that the defendant pay the third party’s costs of defending the third party proceeding. The defendant resists such an order and argues that all questions regarding the costs of the third party should be reserved until after the trial.  The defendant argues that there are live issues as to whether:
    1. (a)
      the plaintiff should be required to pay some or all of the third party’s costs; and
    2. (b)
      the third party should be deprived of part of its costs by the manner in which it conducted its defence of the third party claim.
  2. [23]
    The plaintiff supports the third party’s position and contends that the question of the costs of the third party proceeding ought not be deferred, and that the defendant ought to be ordered to pay the third party’s costs now.

The Principles

  1. [24]
    There is some controversy about the principles that apply.
  2. [25]
    The plaintiff contended that the orthodox approach is that where a party discontinues against another, the discontinuing party should pay the other party’s costs on a standard basis.[2]  The plaintiff contended that this was the approach of Bond J in Fairfield Services Pty Ltd (in liquidation) v Leggatt.[3]
  3. [26]
    Similarly, the third party sought what it described as “the usual order” as to costs, namely that the defendant pay the third party’s costs of the proceedings to be assessed on the standard basis.[4] Even the defendant seemed to concede that there was a usual costs order.[5]
  4. [27]
    I reject the notion that there is a usual order, or an orthodox approach, or that the reasons of Bond J in Fairfield Services provide support for such an orthodox or usual order.
  5. [28]
    First, rule 307 of the Uniform Civil Procedure Rules 1999 (UCPR) does not impose any fetters on the discretion.  Rule 307 is in these terms:
  1. (1)
    A party who discontinues or withdraws is liable to pay—
  1. (a)
    the costs of the party to whom the discontinuance or withdrawal relates up to the discontinuance or withdrawal; and
  1. (b)
    the costs of another party or parties caused by the discontinuance or withdrawal.
  1. (2)
    If a party discontinues or withdraws with the court’s leave, the court may make the order for costs it considers appropriate.
  1. [29]
    Whilst rule 307(1) specifies that a discontinuing party (without the court’s leave) is liable to pay costs, rule 307(2) explicitly provides that the court is to make an order for costs that it considers appropriate. Nothing in the ordinary and natural meaning of words of rule 307(2) imposes any presumption or fetter on the court’s discretion to make an order for costs that the court considers appropriate.
  2. [30]
    Second, nothing in the context of rule 307 or in the object and purposes of the rules relating to discontinuance and withdrawal supports the notion that there is any usual costs order under rule 307(2). A plaintiff may seek the court’s leave to discontinue or withdraw for a wide variety of reasons.[6] The proceedings may have achieved their objective, or the defendant may have desisted with the impugned conduct, or there may have been a change to the statute law governing the case after the proceeding began,[7] or the pursuit of the proceeding may have become pointless, or hopeless. Or, after an interlocutory or interim order, the proceeding may have “simply lain like a dead pigeon in the street”.[8]
  3. [31]
    Because of the myriad of circumstances that can arise, the court’s discretion to allow a plaintiff to discontinue is a wide one. It is recognised that it is not desirable that a plaintiff should be compelled to litigate against his or her will.[9] It will be relevant to consider whether injustice or prejudice will be caused to the defendant,[10]although the wide discretion to allow a plaintiff to discontinue is not to be fettered by any rule that leave will never be granted unless the right of the defendant can be completely protected.[11] And, the defendant may object to leave because discontinuance of the proceeding would deny the defendant the opportunity to vindicate his or her reputation and bring a counter-claim against the plaintiff.[12]
  4. [32]
    None of that context suggests that the court’s power to make the order for costs it considers appropriate is confined or bound by an assumption as to what is usual or orthodox.
  5. [33]
    Third, UCPR rule 681, to the effect that costs follow the event unless the court orders otherwise, has limited relevance.  That is because, where the proceedings are discontinued prior to any hearing on the merits, there is no ‘event’ which will, in the usual case, determine how costs are to be awarded.[13]
  6. [34]
    Fourth, the reasons of Bond J in Fairfield Services do not provide any support for so called usual or orthodox approach that the discontinuing party should pay the released party’s costs. In Fairfield Services, about three weeks before the commencement of a 10 day trial, the plaintiff sought and obtained leave to discontinue because they had formed the view that there was no prospect of effecting a settlement with the defendants and the costs of pursuing the proceeding to a conclusion at trial had come to outweigh the benefits likely to be obtained from a trial.[14] The defendants did not oppose the grant of leave to discontinue, but contended that the plaintiffs should pay their costs to be assessed on the indemnity basis. The plaintiffs sought an order that there be no order as to the costs of the proceeding. After explaining that costs orders are truly discretionary, and that there are no absolute rules, His Honour set out these principles:
    1. (a)
      Even though the general rule that costs follow the event does not apply, it may nevertheless be appropriate to make an order that costs are borne by one side. Each case will depend on its own facts, but it may be relevant to consider the following:
      1. (i)
        (in a particular case) the conduct of the defendant prior to the commencement of the proceeding, where such conduct may have precipitated the litigation;
      1. (ii)
        the whole of the proceeding, including whether the plaintiff has acted reasonably in commencing and continuing to prosecute the proceeding and whether the defendant has acted reasonably in defending it, but bearing in mind that the question of reasonableness may not be one capable of determination absent a full hearing on the merits;
      1. (iii)
        the reasons for discontinuance but bearing in mind that the subjective considerations of one party not put before the other party will generally be immaterial so that the discretion will be exercised on the basis of the objective circumstances established on the evidence;
    2. (b)
      when evaluating the relevant considerations, there is an important distinction between: (1) cases in which one party, after litigating for some time, effectively surrenders to the other; and (2) cases where some supervening event, or settlement, so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs;
    3. (c)
      if the only information before the Court is that the proceeding was discontinued but at a date after the first defence had been filed, there would be no reason not to exercise the r 307(2) discretion in the same way as suggested by r 307(1). In such a case, it would be difficult to see why plaintiffs who discontinue before the first defence must pay their opponent’s costs, but plaintiffs who wait to discontinue for months or years after the first defence should not. Without more, those facts would normally be regarded as demonstrating a strong ground to award costs against the discontinuing plaintiffs. But there might well be some particular reason why the discontinuing plaintiffs should not pay an opponent’s costs, or indeed, why the opponent should pay the costs of the discontinuing plaintiffs.[15]
  7. [35]
    I do not read His Honour’s reasoning as imposing any general rule or as suggesting any orthodoxy. Quite the contrary. His Honour was careful to say that the exercise of the discretion depended on the facts and circumstances of the particular case. The scenario explained by His Honour at subparagraph (c) above is a limited situation where the only information before the court is that the proceeding was discontinued but at a date after the first defence had been filed and is subject to there being a particular reason why the discontinuing plaintiffs should not pay an opponent’s costs.

Principles Applied to Third Party Proceedings

  1. [36]
    Of course, in contradistinction to Fairfield Services, the present case involved a defendant who obtained leave to discontinue against the third party. The principal proceeding brought by the plaintiff against the defendant will be continuing to a trial in October 2023. And so, the general rule that costs follow the event is not engaged. There is, as yet, no ‘event’ as between the plaintiff and the defendant and there is no ‘event’ as between the defendant and the third party. That is in circumstances where, as explained, the defendant joined the third party explicitly on the basis of the content of the plaintiff’s allegations against the defendant regarding the strength of the concrete slab.
  2. [37]
    The principles explained by Bond J in Fairfield Services apply here, with some adaption needed because of the dual nature of the proceedings. And so, the relevant considerations include:
  3. (a)
    The conduct of the third party prior to the joinder;
  4. (b)
    Whether the defendant has acted reasonably in joining the third party and continuing to prosecute the third party proceeding – especially having regard to the claims made by the plaintiff against the defendant;
  5. (c)
    Whether the third party has acted reasonably in defending the third party proceeding;
  6. (d)
    The degree of connection between the issues in the principal proceeding and the third party proceeding, and whether the third party has leave to contest the defendant’s liability to the plaintiff and leave to cross-examine the plaintiff’s witnesses;
  7. (e)
    The reasons for the discontinuance, including whether the defendant has effectively surrendered to the third party, or whether there is some supervening event or settlement that removes or modifies the subject of the dispute;
  8. (f)
    A recognition that the court exercising its discretion as to costs might make a diverse array of costs orders,[16] including:
  9. (i)
    in the event that the plaintiff succeeds against the defendant, the plaintiff will be entitled to a costs order against the defendant, and the costs of the third party proceedings will depend on whether the defendant’s third party proceedings are successful or not;
  10. (ii)
    in the event that the defendant succeeds against the plaintiff, but not against the third party, the defendant will be entitled to its costs against the plaintiff but, then, the issue is whether:
  11. (A)
    the plaintiff may be liable to indemnify the defendant for the defendant’s liability for costs to the third party (or pay costs direct to the third party);[17] or
  12. (B)
    the defendant is entitled to recover from the plaintiff both its own costs and the costs of the third party the defendant has been ordered to pay.[18]
  13. [38]
    That latter species of costs order is likely where the plaintiff’s claim is what prompted, or was a catalyst for, the third party proceedings, and it was reasonable for the defendant to join the third party in the proceedings.[19]The plaintiff can be ordered to pay the third party’s costs directly, or ordered to indemnify the defendant for the third party’s costs, depending on a variety of factors.[20]
  14. [39]
    There are a variety of factors to be considered in deciding whether the costs of a successful third party ought fairly to be borne by the unsuccessful plaintiff. The factors here are similar to and overlap with the principles explained by Bond J in Fairfield Services. A useful statement of the factors relevant in the third party context can be found in the reasons of Finn J in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd.[21] There, Finn J thought the following factors fall to be considered, with some care because they were capable of misleading:
    1. (a)
      whether it was “reasonable” or “appropriate” for a defendant to make the third party claim but care needs to be taken with this because, while the making of the third party claim may have been justifiable, it may nonetheless be quite inappropriate to pass on the costs of a successful third party to the plaintiff;[22]
    2. (b)
      A common instance where the third party costs will not be passed on is where the third party claim raised “private issues” and the third party was not necessarily joined because of the applicant’s claim;[23]
    3. (c)
      A distinct consideration is whether the applicant's claim was the catalyst for the third party claim; and in some cases the plaintiff's claim may render the third party proceedings “inevitable”;[24]
    4. (d)
      Finn J cautioned that causation alone without regard to the nature of the third party claim itself seems hardly sufficient to justify a ‘pass on’ order;[25]
    5. (e)
      Perhaps the most significant consideration is the relationship of the nature of the principal proceeding to that of the third party claim; this nexus has been expressed in various ways: for example, does the nature of a plaintiff’s claim, or do allegations in support of it, render it reasonable for the defendant to make, in turn, the third party claim.[26]
  15. [40]
    In Furber v Stacey[27] Hodgson JA added the further consideration that a third party may be left to bear some or all of its own costs, for example, if it chooses to contest the plaintiff’s claim where it would have been reasonable to leave this entirely to the defendant or incurs costs only on issues raised against the defendant which it loses.
  16. [41]
    In some circumstances, an order can be made that the plaintiff pay the defendant’s costs of third party proceedings ultimately abandoned through the conduct by the plaintiff of its case (for example, late abandonment of allegations in the statement of claim upon which the third party proceedings are based). However, such a costs order will not be made, in the case of third party proceedings issued without leave, where the plaintiff has not had an opportunity to consider its attitude to the third party proceedings.[28]

Principles Applied to the Present Case

  1. [42]
    There are a number of factors that are relevant to the discretion in this case.
  2. [43]
    The first is that the defendant’s claim against the third party has been discontinued. From a practical perspective, the third party’s defence of the third party proceedings has been successful, even though that part of the case has not proceeded to a trial.[29]
  3. [44]
    The plaintiff and the third party argued that the defendant has chosen to discontinue and is thereby capitulating and surrendering its position.[30] At least at this point in the proceeding, I am unable to attribute that character to the discontinuance. That is because the defendant has given notice that it proposes to argue that the third party should be deprived of part of its costs because of the manner in which it conducted the defence of the third party claim, including the third party’s conduct in ‘recycling’ untenable claims made by the plaintiff.[31] The defendant’s arguments are that:
    1. (a)
      The third party made the untenable assumption that the compressive strength of the concrete was reduced by the defendant and/or its contractors adding extra water to the concrete mixture after it arrived at site;[32]
    2. (b)
      The third party alleged that the defendant’s handling of the concrete reduced its strength when there was no evidence to support that allegation;
    3. (c)
      The third party relied on untenable and evasive denials, such as the third party’s express warranty that the concrete was to have a compressive strength rating of N32;
    4. (d)
      The third party’s defence adopted a stance of saying that further particulars would be provided after exchange of disclosure and expert evidence;
    5. (e)
      The third party amended its defence in February 2022 to remedy deficiencies pointed out by the defendant.   
  4. [45]
    For those reasons there is a live issue as to whether the third party is entitled to a costs order or whether it is entitled to all of its costs. I am unable to assess the veracity of those complaints about the manner in which the third party conducted its defence. In the evidence on this application the parties have not engaged on that issue. There is no evidence which descends into specifics about the complaints, let alone responses in evidence from the third party. That makes it impossible to properly assess whether the criticisms are valid or not, let alone whether the conduct ought to impact the costs order.
  5. [46]
    The second factor relevant to the discretion is that the third party was joined to the proceeding because of the plaintiff’s allegation that the slab was under-strength. The defendant contends that the plaintiff has now effectively abandoned that allegation.[33] I do not know whether that is accurate or not. The allegations are not abandoned on the pleadings, and, with one exception, I was not invited to assess the more recent expert evidence.
  6. [47]
    The exception is that the defendant invited me to read a report obtained from the plaintiff from expert structural engineers Scott Woolcock Consulting Pty Ltd dated 28 August 2022.[34] That report records that the experts were asked to identify the likely causes of the breakdown of the concrete, including the curing of the concrete, the use of water in the laying of the concrete, the concrete mix used, the concrete as delivered on site by the third party, and any other causes. The report records corrected average core concrete strengths at 32.2 MPa, 31.7 MPa and 32.5 MPa, but explains that the strength of concrete increases over time and that a conservative assumption is that the concrete strength would have increased by 10% over the 6 years since the concrete was laid. The report concludes that, for the compressive strength of the concrete to have been 32 MPa when the concrete was laid, the compressive strength should now be 35 MPa. It is difficult to know what to make of that. I did not have the benefit of any explanation or oral evidence. And, it may be that there are other expert reports. It is sufficient to note that there is an unresolved controversy about the compressive strength of the concrete, and the causes of any shortfall in strength.   
  7. [48]
    It follows that it is difficult to assess whether the plaintiff is likely to succeed against the defendant, and on what basis. And it is impossible to properly assess the nexus between the plaintiff’s claim and the third party claim. Importantly, it is impossible to assess whether it was reasonable for the defendant to join the third party in the absence of a hearing on the merits. The only assessment that can be made is that the allegations that the plaintiff made at the outset were sufficiently broad to encompass a complaint about the quality of the concrete mix, which may have implicated the third party.
  8. [49]
    The third party says that the plaintiff never alleged that the concrete mixture supplied by the third party was defective. That much is true. However, as explained, the plaintiff merely specified that the concrete slabs did not meet the specification of 32 MPa. That allegation of a failure of an outcome was sufficiently broad to encompass the third party claim. In any event, the trial judge’s findings about the facts, and particularly the cause, or causes, of any problems will be a factor relevant to the costs discretion. 
  9. [50]
    The third factor is that the trial of the principal proceeding is not too far into the future. The trial is set down for October 2023 – which is only 3 months away. Reserving the costs to the trial, where all of the relevant facts can be properly considered, is unlikely to cause any significant prejudice.
  10. [51]
    Two important issues can be properly assessed at trial. They are whether it was reasonable for the defendant to join the third party, and the proper character of the defendant’s decision to seek the court’s leave to discontinue. The court’s ability to make a proper assessment of those two broad issues is impaired by an incomplete picture of the evidence.
  11. [52]
    The third party argued that it would be prejudiced by the delay because:
    1. (a)
      its entitlement to interest on costs does not accrue until a costs order is made;
    2. (b)
      the security provided by the third party for the defendant’s costs (a bank guarantee) expires on 31 March 2024;
    3. (c)
      the third party would be required to monitor the proceedings and re-engage to argue costs.
  12. [53]
    None of those matters are likely to comprise significant prejudice. And they do not comprise prejudice which outweighs the risks of determining costs now, before the facts are clear and an appropriate costs order can be made.
  13. [54]
    The plaintiff argued that adjourning the issue of costs would add an extra factor of complexity to resolving the dispute. I am unable to see why that is so. It is a dangerous exercise to try to assess what might or might not be an impediment to settlement discussions. One party’s impediment may be the opposite party’s encouragement.
  14. [55]
    Overall, it seems to me that the discretion is better exercised by reserving the costs to the trial judge. That will preserve the defendant’s arguments about whether the third party is entitled to all of its costs. It will preserve the defendant’s ability to argue that the plaintiff should bear all of the costs. And it will enable the costs order to be moulded will full visibility of the facts.
  15. [56]
    For those reasons I propose to reserve the question of the costs of the third party proceeding to the trial judge.

Footnotes

[1]  A megapascal (MPa) is a measure of the compressive strength of concrete.

[2]  Plaintiff’s Submissions at [8].

[3]  [2020] QR 50.

[4]  Third Party’s Submissions at [2]. This approach was also articulated in the oral submissions: “…my client seeks the usual order as to costs which is that the defendant pay my client’s costs of the proceedings on the standard basis.” (Transcript T1-3 line 26).

[5]  The defendant submitted that the “usual costs order (that costs follow the event) is subject to what the justice of the case requires.” (Defendant’s submissions at [15]).

[6]  Leave is sought under UCPR rule 304.

[7]See Brown v Parker [1961] WAR 194.

[8]JT Stratford & Son Ltd v Lindley (No 2) [1969] 1 WLR 1547 at 1554 (per Winn LJ).

[9]Covell Matthews & Partners v French Wools Ltd [1997] 2 All ER 591 at 594; Civil Procedure Queensland (service) LexisNexis at [r 304.10].

[10]Fox v Star Newspaper Co Ltd [1900] AC 19; Civil Procedure Queensland (service) LexisNexis at [r 304.10].

[11]SCI Operations Pty Ltd v Trade Practices Commission (1984) 2 FCR 113.

[12]Fuller v Toms [2010] QCA 283 at [25] per Fraser JA: “The appellant argued that he did suffer such prejudice because he wished to vindicate his reputation by successfully defeating the respondent's defamation claim on its merits. I have no difficulty in accepting that leave to discontinue might properly be refused if a defamation claim were brought for an improper purpose and the claimant later wished to abandon the claim in order to prevent the respondent from repairing damage to his or her reputation arising from the commencement of the claim. But that is not the case on the evidence in this matter.”

[13]  See the discussion of this topic by Bond J in Fairfield Services Pty Ltd (in liquidation) v Leggatt [2020] 5 QR 50 at [21] and by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624.

[14]Fairfield Services at [3].

[15]Fairfield Services at headnote and [20]-[23].

[16]  For a useful discussion of this topic see Dal Pont, Law of Costs, 5th ed, 2021 at [11.33]-[11.39].

[17]  If the facts show that the joinder of the third party by the defendant was solely for the defendant’s benefit and immaterial to the plaintiff, the unsuccessful plaintiff should not be liable for the third party’s costs: Dal Pont, Law of Costs, 5th ed, 2021 at [11.35].

[18]  Dal Pont, Law of Costs, 5th ed, 2021 at [11.35]. In

[19]Thomas v Times Book Company Ltd [1966] 1 WLR 911 at 920; Dal Pont, Law of Costs, 5th ed, 2021 at [11.35].

[20]GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 688; 201 ALR 55.

[21]  [2003] FCA 688. His Honour referred to and relied on the guiding principles explained by King CJ in Lombard Insurance Co (Australia) Ltd v Pastro (1994) 175 LSJS 448.

[22]  [2003] FCA 688 at [73].

[23]  [2003] FCA 688 at [73] relying on Gold Coast Bakeries (Qld) Pty Ltd v Heat and Control Pty Ltd [1992] 1 Qd R 162 at 175; see also Paron v Fry (No 2) [1990] 1 Qd R 550.

[24]  [2003] FCA 688 at [74]; Thomas v Times Book Co Ltd [1966] 1 WLR 911 at 920.

[25]  [2003] FCA 688 at [74].

[26]  [2003] FCA 688 at [75].

[27]  [2005] NSWCA 242 at [33].

[28]Rathie v ING Life Ltd [2003] QSC 429; Court Forms, Precedents & Pleadings Qld at [35,015].

[29]  See Swisstex Finance Pty Ltd v Lamb [1993] Qd R 463.

[30]  Plaintiff’s submissions at [11], [12].

[31]  Defendant’s submissions at [2].

[32]  The allegation of adding extra water seems to have been deleted from the third party’s defence when it filed an amended defence in February 2022 (paragraph 14.3 (b) and 18.4(a) were deleted).

[33]  Defendant’s submissions at [12].

[34]  The report is an exhibit to an affidavit of Mr Finch affirmed on 19 October 2022.

Close

Editorial Notes

  • Published Case Name:

    Hestbay Pty Ltd v One Sector Pty Ltd

  • Shortened Case Name:

    Hestbay Pty Ltd v One Sector Pty Ltd

  • Reported Citation:

    (2023) 15 QR 319

  • MNC:

    [2023] QSC 154

  • Court:

    QSC

  • Judge(s):

    Freeburn J

  • Date:

    14 Jul 2023

  • Selected for Reporting:

    Editor's Note

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Brown v Parker [1961] WAR 194
2 citations
Jump To
Cite 1 - [1961] WAR 194
Cite 2 - [1961] WAR 194
Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) (1900) AC 19
2 citations
Jump To
Cite 1 - (1900) AC 19
Cite 2 - (1900) AC 19
Covell Matthews & Partners v French Wools Ltd [1997] 2 All ER 591
2 citations
Jump To
Cite 1 - [1997] 2 All ER 591
Cite 2 - [1997] 2 All ER 591
Fairfield Services Pty Ltd (in liquidation) v Leggatt [2020] QR 50
2 citations
Jump To
Cite 1 - [2020] QR 50
Cite 2 - [2020] QR 50
Fairfield Services Pty Ltd (in liquidation) v Leggett(2020) 5 QR 50; [2020] QSC 183
3 citations
Jump To
Cite 1 - (2020) 5 QR 50
Cite 2 - (2020) 5 QR 50
Cite 3 - (2020) 5 QR 50
Fuller v Toms [2010] QCA 283
2 citations
Jump To
Cite 1 - [2010] QCA 283
Cite 2 - [2010] QCA 283
Furber v Stacy [2005] NSWCA 242
2 citations
Jump To
Cite 1 - [2005] NSWCA 242
Cite 2 - [2005] NSWCA 242
GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited [2003] FCA 688
8 citations
Jump To
Cite 1 - [2003] FCA 688
Cite 2 - [2003] FCA 688
Cite 3 - [2003] FCA 688
Cite 4 - [2003] FCA 688
Cite 5 - [2003] FCA 688
Cite 6 - [2003] FCA 688
Cite 7 - [2003] FCA 688
Cite 8 - [2003] FCA 688
GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 201 ALR 55
1 citation
Jump To
Cite 1 - (2003) 201 ALR 55
Gold Coast Bakeries (Qld) Pty Ltd v Heat & Control Pty Ltd [1992] 1 Qd R 162
2 citations
Jump To
Cite 1 - [1992] 1 Qd R 162
Cite 2 - [1992] 1 Qd R 162
J T Stratford & Son Ltd v Lindley (No 2) (1969) 1 WLR 1547
2 citations
Jump To
Cite 1 - (1969) 1 WLR 1547
Cite 2 - (1969) 1 WLR 1547
Lombard Insurance Co ( Australia ) Ltd v Pastro (1994) 175 LSJS 448
1 citation
Jump To
Cite 1 - (1994) 175 LSJS 448
Paron v Fry (No 2) [1990] 1 Qd R 550
2 citations
Jump To
Cite 1 - [1990] 1 Qd R 550
Cite 2 - [1990] 1 Qd R 550
Rathie v ING Life Ltd [2003] QSC 429
2 citations
Jump To
Cite 1 - [2003] QSC 429
Cite 2 - [2003] QSC 429
Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622
2 citations
Jump To
Cite 1 - (1997) 186 CLR 622
Cite 2 - (1997) 186 CLR 622
SCI Operations Pty Ltd v Trade Practices Commission (1984) 2 FCR 113
1 citation
Jump To
Cite 1 - (1984) 2 FCR 113
Swisstex Finance Pty Ltd v Lamb [1993] Qd R 463
2 citations
Jump To
Cite 1 - [1993] Qd R 463
Cite 2 - [1993] Qd R 463
Thomas v Times Book Co Ltd (1966) 1 WLR 911
3 citations
Jump To
Cite 1 - (1966) 1 WLR 911
Cite 2 - (1966) 1 WLR 911
Cite 3 - (1966) 1 WLR 911

Cases Citing

Case NameFull CitationFrequency
Hestbay Pty Ltd v One Sector Pty Ltd [2024] QSC 180 2 citations
Hestbay Pty Ltd v One Sector Pty Ltd [2025] QSC 4 2 citations
1

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