Piety Constructions Pty Ltd v Hville FCP Pty Ltd (No 2)

I gave judgment in this matter on 29 September 2022. [1] I shall use the same defined terms here.

I dismissed the Builder’s Summons on the basis that the Developer had served its Payment Schedule within the 10 business day period specified in s 14(4)(b)(ii) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (“the Act”):

Much turned on when the Payment Schedule was received. It was common ground that if the Developer had not served its Payment Schedule within the 10 business day period referred to in s 14(4)(b)(ii) of the Act, the Builder was entitled to judgment against the Developer in the sum of $10,179,961.84.

I am now dealing with the question of costs.

There is no dispute that the Builder must pay the Developer’s costs of the proceedings on the ordinary basis.

The Developer, however, seeks its costs on an indemnity basis from 21 July 2022 on the basis that an Offer of Compromise or, alternatively, a Calderbank Offer, was served on 20 July 2022, offering to resolve the matter on the basis of a judgment in favour of the Builder against the Developer for “$10,000 inclusive of GST” (and, inferentially, of costs).

Earlier, on 11 July 2022, the Developer’s solicitors had sent to the Builder’s solicitors a letter arguing that the Builder’s case was bound to fail, essentially for the reasons that I found, and drawing attention to the decision of the Court of Appeal in Falgat Constructions Pty Limited v Equity Australia Corporation Pty Limited [3] to which I referred at [23] of my judgment and which Mr Sheldon, who appeared for the Developer, emphasised in both written and oral submissions.

Notwithstanding these matters, and although the Developer has achieved a better result than its offer, I am not persuaded that it is appropriate in this case to order indemnity costs.

The offer of $10,000 was, in the circumstances, an offer that the Builder capitulate.

Although I accepted the Developer’s submissions, and thus, in substance, the argument put by the Developer in the correspondence of 11 July 2022, the Builder’s contentions were by no means hopeless.

As was pointed out on behalf of the Builder, there is no previous authority dealing with the particular circumstances of this case. I also accepted that there is some authority that could be seen as supporting the Builder’s argument. [4]

Ultimately, I concluded that the “better view” was that which was advocated by the Developer. [5]

The appropriate order is that the Builder pay the Developer’s costs of the proceedings on the ordinary basis, and I so order.