Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In liquidation) (No 2)

1. [1]

   THE COURT: The Court delivered judgment in this matter on 12 February 2019. [1] The Court reached the following conclusions: [2]

2. [2]

   The Court made the following orders: [3]

3. [3]

   The parties have largely agreed on short minutes of order, except in relation to costs. The only disagreement (other than costs) is whether the appeal and cross-appeal should be “allowed” or “allowed in part”. Although nothing of substance turns on the difference in wording, the latter formulation is more appropriate.

4. [4]

   Thus the following orders should be made:

Submissions

1. [5]

   Seymour submits that it should be entitled to 75 per cent of its costs, on an ordinary basis, of the proceedings both in the Equity Division and in this Court. Seymour says that it succeeded in this Court in having an adjudication determination against it of $5,074,218.27 set aside and replaced with a judgment in Ostwald’s favour of $2,505,237.58 (Scheduled Amount). Seymour submits that it should receive the bulk of its costs in the Equity Division proceedings because it succeeded in obtaining its primary relief, namely the setting aside of the Adjudication Determination.

2. [6]

   Seymour criticises Ostwald’s conduct of the proceedings in certain respects. It says that Ostwald waited until the hearing of the appeal to tender fresh evidence which resulted in Seymour withdrawing a ground based on s 109 of the Constitution. [4] Seymour also says that Ostwald unsuccessfully opposed the grant of leave to Seymour to commence the appeal.

3. [7]

   Ostwald seeks an order that Seymour pay 80 per cent of Ostwald’s costs of the appeal and cross-appeal. Ostwald points out that Seymour’s only success on the appeal was in setting aside the order for rectification of the Contract. Ostwald also points out that this Court rejected Seymour’s challenge to Ostwald’s entitlement to a judgment in its favour for the Scheduled Amount, and also rejected Seymour’s staunch defence (maintained until the hearing itself) of the decision in Façade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd (Façade). [5]

4. [8]

   Ostwald contends that Seymour had, or should have had, the relevant information available to it well before the hearing in this Court, making it clear that its arguments regarding s 553C of the Corporations Act 2001 (Cth) and on the constitutional point “were doomed”. Moreover Ostwald says that a grant of leave to commence and continue the appeal was an essential precondition to Seymour’s appeal proceedings. It notes that Seymour did not seek costs at the hearing, at which leave to proceed against Ostwald was granted.

5. [9]

   Ostwald agrees with Seymour that the costs of the proceedings in the Equity Division should follow the event, but asserts that the relevant “event” was a multi-million judgment in Ostwald’s favour.

Reasoning

1. [10]

   As was noted in the Principal Judgment, there were numerous twists and turns in the argument on appeal. [6] To some extent, similar twists and turns were evident in the Equity Division proceedings.

2. [11]

   The ultimate result of the proceedings is that:

3. [12]

   Each party has enjoyed some success and experienced some failures in the litigation. Our assessment is that Ostwald, since it has obtained the benefit of a judgment in its favour (albeit one that cannot be immediately enforced), has achieved somewhat greater success than Seymour, notwithstanding the dismissal of Ostwald’s cross-claim seeking rectification. Justice will be done if Seymour is ordered to pay 25 per cent of Ostwald’s costs of the proceedings in the Equity Division. It will be simpler and less likely to generate further disputation if a single order for costs is made, rather than separate orders in relation to the costs of Seymour’s claim and Ostwald’s cross-claim.

4. [13]

   On the appeal:

5. [14]

   Just as Ostwald has enjoyed rather more success than Seymour in the proceedings as a whole, it also enjoyed rather more success than Seymour on the appeal, suggesting that Ostwald should have the benefit of an order for payment of at least some of its costs on the appeal.

6. [15]

   We do not accept Seymour’s submission that Ostwald should bear responsibility for Seymour’s belated decision to abandon its constitutional argument as Seymour had sufficient information available to assess the merits of the argument before the hearing commenced. The constitutional issue required a good deal of preparation on both sides prior to the hearing, and thus contributed significantly to the costs of the appeal. Moreover, Ostwald’s approach to Seymour’s application for leave to proceed was not unreasonable. In the absence of any order for costs in favour of Seymour at the time leave was granted, Ostwald should not be deprived of any costs to which it otherwise is entitled by reason of the application for leave.

7. [16]

   In these circumstances, Seymour should be ordered to pay one third of Ostwald’s costs of the appeal.

Orders

1. [17]

   The following orders should be made: