Karam Group Pty Ltd v HCA Queensland Pty Ltd [No 2]
[2024] QSC 74
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- Unreported Judgment
- Karam Group Pty Ltd v HCA Queensland Pty Ltd [No 2][2024] QSC 74
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Karam Group Pty Ltd v HCA Queensland Pty Ltd [No 2][2024] QSC 74
Karam Group Pty Ltd v HCA Queensland Pty Ltd [No 2][2024] QSC 74
SUPREME COURT OF QUEENSLAND
CITATION: | Karam Group Pty Ltd ATF The Karam (No. 1) Family Trust v HCA Queensland Pty Ltd (No 2) [2024] QSC 74 |
PARTIES: | KARAM GROUP PTY LTD ATF THE KARAM (NO. 1) FAMILY TRUST ACN 512 325 943 (applicant) v HCA QUEENSLAND PTY LTD ACN 629 849 814 (first respondent) PETER THOMAS SARLOS (Registered Adjudicator Number J1158721) (second respondent) ADJUDICATION REGISTRAR, QUEENSLAND BUILDING AND CONSTRUCTION COMMISSION (third respondent) |
FILE NO/S: | 11131 of 2023 |
DIVISION: | Trial Division |
PROCEEDING: | Originating Application |
ORIGINATING COURT: | Supreme Court of Queensland |
DELIVERED ON: | 2 May 2024 |
DELIVERED AT: | Brisbane |
HEARING DATE: | Determined without an oral hearing. Written submissions filed on 28 March 2024. |
JUDGE: | Bradley J |
ORDER: | THE ORDER OF THE COURT IS THAT:
|
CATCHWORDS: | PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where the applicant brought a proceeding seeking to restrain the first respondent from pursuing part of a payment claim on the grounds of issue estoppel and abuse of process – where, in the same proceeding, the applicant sought to restrain the second respondent from issuing an adjudication decision in respect of the first respondent’s payment claim on the ground of apprehended bias by the second respondent – where, after the hearing of the application and two days before the Court was scheduled to pronounce the order to be made in the proceeding, the first respondent paid the adjudicator’s fee to the second respondent – where the adjudicator issued the adjudication decision, being compelled to do so by the first respondent’s payment – where the Court found for the applicant in respect of issue estoppel and abuse of process by the first respondent, but against the applicant in respect of apprehended bias by the second respondent – where, after the Court made those findings, the first respondent consented to an injunction restraining it from pursuing that part of its payment claim – whether the parties’ costs of the proceeding should be the subject of orders based on each party’s success on the “issues” raised by the applicant – whether there should be a departure from the usual order as to costs of the proceeding – whether the first respondent should pay the applicant’s costs of the proceeding – whether the applicant’s costs should be assessed on the indemnity basis from after the date the Court published its findings Building Industry Fairness (Security of Payment) Act 2017 (Qld), Chapter 3, Part 4 Uniform Civil Procedure Rules 1999 (Qld), rr 5, 681 Karam Group Pty Ltd ATF the Karam (No 1) Family Trust v HCA Queensland & Ors [2023] QSC 245, considered Jones v Trad (No 3) [2013] NSWCA 463, cited Latoudis v Casey (1990) 170 CLR 534, cited |
COUNSEL: | A C Stumer KC with M R Derrington for the applicant The first respondent was not represented by counsel |
SOLICITORS: | HopgoodGanim for the applicant CDI Lawyers for the first respondent |
- [1]On 14 March 2024, the Court made an order by the consent of the applicant (Karam) and the first respondent (HCA).[1] It is explained in reasons published that day.[2] The order restrained HCA from pursuing any claim, argument, or allegation that Karam is or was not entitled to liquidated damages on account of the prevention principle, in any adjudication application made under Chapter 3, Part 4 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (the Act), in respect of or concerning a construction contract made between Karam and HCA. The order disposed of all that remained in terms of the substantive relief Karam sought in the proceeding.
- [2]Although they agreed on the terms of the injunction to be made, Karam and HCA did not agree about an appropriate order in respect of the costs of the proceeding.
- [3]The costs of a proceeding, including a part of a proceeding, are at the discretion of the Court, but follow the event, unless the Court orders otherwise.[3] Both Karam and HCA ask the Court to order otherwise.
- [4]It is common ground that the Court has a wide discretion in awarding costs. The Court must exercise the discretion judicially and by reference to relevant considerations.
- [5]One consideration is the primary purpose of any costs order. That is to protect a successful party from the undue depletion of its resources from the pursuit of its lawful rights or the defence of its lawful conduct. Its purpose is not to punish an unsuccessful (or insufficiently successful) party.[4] Another consideration is the express purpose of the Uniform Civil Procedure Rules 1999 (Qld) (the UCPR), which is to facilitate the just and expeditious resolution of the real issues in civil proceedings at minimum expense.[5] The rules are to be applied with the objective of facilitating that purpose.[6]
The parties’ competing contentions about costs
- [6]On 28 March 2024, pursuant to the Court’s direction,[7] Karam and HCA filed written submissions about the order each contends ought to be made concerning the costs of the proceeding.
- [7]Karam seeks an order that HCA pay Karam’s costs of the proceeding on the standard basis to and including 3 November 2023 and on an indemnity basis after that date. Karam submits that costs assessed on an indemnity basis after 3 November 2024 are justified because, on 1 November 2023, HCA paid the adjudicator’s fee to the second respondent (the adjudicator). This payment compelled the adjudicator to issue the adjudication decision. By 1 November 2023, both parties were aware that on 3 November 2023 Martin SJA was to publish reasons in respect of the application by Karam, which had been heard by his Honour on 27 September 2023. Amongst the relief sought by Karam was an injunction restraining the adjudicator from issuing the adjudication decision. It follows, Karam submits, that HCA “knowingly and delinquently compelled the release of the adjudication decision prior to the delivery” of his Honour’s decision.
- [8]HCA seeks an order that each of the two active parties pay 50% of the other’s costs of the proceeding. Alternatively, HCA submits that there should be no order as to costs. HCA submits its proposed order is appropriate because Karam pursued two “issues” in the proceeding, succeeding on one and failing on the other.
- [9]At a hearing before me on 5 December 2023 regarding this proceeding and the separate proceeding (see paragraph [14] below), leading counsel for HCA submitted that any order about the costs of this proceeding should be made by Martin SJA, because his Honour heard Karam’s application on 27 September 2023 and published detailed reasons on 3 November 2023.[8] This oral submission was not raised by HCA in its written submissions filed on 28 March 2024. In the circumstances, the relevant costs orders should be determined on the written submissions.
Consideration of the parties’ written submissions
- [10]It is convenient to first consider HCA’s submissions for an “issues-based” costs order and then Karam’s submissions about indemnity costs.
“Issues-based” costs
- [11]In a case with multiple issues, generally the Court does not attempt to differentiate between the issues on which a party was successful and those on which it failed, “unless a particular issue or group of issues is clearly dominant or separable.”[9]
- [12]Before Martin SJA, Karam obtained some of the findings it sought. Karam persuaded the Court that an issue estoppel arose between it and HCA with respect to Karam’s entitlement to liquidated damages under the construction contract, and that it had been an abuse of process by HCA to raise that claim again in the most recent adjudication. His Honour made these findings. The findings were the basis for the injunction the Court made by consent on 14 March 2024.
- [13]Karam failed to persuade his Honour that some of the actions of the adjudicator gave rise to a reasonable apprehension of bias. Karam’s failure (and equally HCA’s “success”) in this respect had no effect on the substantive outcome of the proceeding. As HCA notes, this was the second time Karam had pressed these submissions, having failed to persuade Muir J.[10]
- [14]The Court’s ruling against Karam’s apprehended bias contention had an effect, albeit not in this proceeding. Karam responded to the adjudicator’s decision by instituting another originating application[11] (the separate proceeding) seeking an order setting it aside on the ground of jurisdictional error. The separate proceeding allowed HCA to contend that some parts of the adjudication decision should remain binding on the parties. The separate proceeding has been determined. It resulted in $130,680 to be paid by Karam to HCA, out of the total adjudicated amount of $4,529,814.68, or about 2.88% of the total. The limited nature of HCA’s success is reflected in the fact that Karam was awarded its costs of the separate proceeding.
- [15]In this proceeding, HCA had success on a discrete issue and failed to obtain any relief. It could not reasonably expect to recover any costs of its ultimately fruitless contest of that issue. Nor could HCA reasonably expect that there would be a reduction in the costs it must pay to Karam, as the ultimately successful party, on that account. HCA’s submissions to the contrary are rejected.
- [16]The circumstances do not call for a costs order that affords Karam less than the usual protection because, in the successful vindication of its rights, it was unsuccessful on an “issue” that did not alter the final outcome.
Indemnity costs
- [17]The application had been heard by Martin SJA on 27 September 2023. On 31 October 2023, the Court notified the parties that a decision would be made on 3 November 2023. HCA’s conduct in paying the adjudicator’s fee on 1 November 2023 was inconsistent with the conduct reasonably expected of a party who appears before the Court, makes submissions on a disputed matter, and so submits to the jurisdiction of the Court to determine the matter. In paying the adjudicator two days before the Court was scheduled to give judgment, HCA sought to pre-empt and circumvent the possibility of an order that the Court had been asked to make which might restrain the issue of the adjudicator’s decision.
- [18]Karam submits it is “unreasonable and unnecessary” for Karam to bear the costs of the proceeding from 3 November 2023. Karam asserts that “the work beyond 3 November 2023 was solely to address the release of the adjudicator’s decision prior to the judgment.”
- [19]HCA’s conduct was plainly unreasonable. It might be considered outrageous. However, I am not persuaded that it had an adverse effect upon Karam that calls for a departure from the usual order as to costs. There is no evidence that Karam incurred increased costs because HCA acted in this way.[12] Nor has Karam shown that an award of costs on the standard basis would be insufficient to protect it, such that an indemnity costs order is appropriate as a means of achieving a fairer result.
- [20]Had HCA not paid the adjudicator’s fee, the consequence of Martin SJA’s finding in Karam’s favour would have been that HCA could not press, and the adjudicator could not determine, HCA’s claim to be repaid the liquidated damages sum. HCA conceded this at the hearing before me on 5 December 2023 and consented to the order (which was made on 14 March 2024) restraining it from raising the claim again. It is not apparent that, if the adjudicator’s decision had not been issued, the Court would have restrained the adjudicator from issuing a decision in respect of the other claims pressed by HCA in the adjudication. In part, this is a result of his Honour’s rejection of Karam’s allegation of apprehended bias by the adjudicator.
- [21]After 3 November 2023, the only hearing in this proceeding coincided with the hearing of the separate proceeding. On that occasion, HCA consented to the injunction Karam sought. There is no material before the Court to indicate what additional work Karam did in this proceeding, save for Karam’s written submissions on the appropriate costs order.
- [22]Against this background, Karam might be understood as contending that, if HCA had not paid the adjudicator’s fee on 1 November 2023, then Karam would not have had to prepare, settle and file written submissions seeking its costs on the indemnity basis. While that would be true, it would not be a compelling submission. It is not entirely facetious to posit that Karam seeks its costs (on the indemnity basis) of arguing that those costs should be assessed on the indemnity basis.
- [23]The public substantially meets the cost of the litigation process. There is a public interest in parties acting reasonably and not making unreasonable use of the Court to the detriment of other litigants and the community generally. The possibility of costs being assessed on the indemnity basis should provide an incentive for parties to avoid unreasonable use of those resources. The costs order Karam seeks does not align with that incentive.
Final Disposition
- [24]In the circumstances, the Court will order that HCA pay Karam’s costs of the proceeding, meaning cost to be assessed on the standard basis.
Footnotes
[1] Properly, the adjudicator took no active part in the proceeding, abiding the decision of the Court.
[2] Karam Group Pty Ltd ATF The Karam (No 1) Family Trust v HCA Queensland Pty Ltd [2024] QSC 34.
[3] Uniform Civil Procedure Rules 1999 (Qld) (UCPR) r 681(1).
[4] Latoudis v Casey (1990) 170 CLR 534, 543 (Mason CJ), 562-563 (Toohey J), 567 (McHugh J).
[5] UCPR, r 5.
[6] Some provisions of the UCPR affect costs orders in particular circumstances. Those rules do not dictate the orders to be made in this instance.
[7] [2024] QSC 34.
[8] Karam Group Pty Ltd ATF the Karam (No 1) Family Trust v HCA Queensland [2023] QSC 245.
[9] Jones v Trad (No 3) [2013] NSWCA 463, [14] (Ward, Emmett and Gleeson JJA), citing Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373, [6] (Beasley, McColl and Basten JJA).
[10] Karam Group Pty Ltd ATF the Karam (No 1) Family Trust v HCA Queensland [2023] QSC 212.
[11] No. 14050 of 2023.
[12] See: Tector v FAI General Insurance Co Ltd [2001] 2 Qd R 463, 464 [5] (McMurdo P, Pincus JA and White J).