Diveva Pty Limited v Port Macquarie-Hastings Council

1. [1]

   HER HONOUR: This is an argument about costs. The plaintiff has filed two notices of motion, one on 21 August 2014 seeking to conduct tests, the other on 19 January 2015, seeking to amend the statement of claim. Both motions have now been resolved.

2. [2]

   The plaintiff seeks its costs of the motions. The defendant seeks its costs on an indemnity basis. The plaintiff is Diveva Pty Limited t/as Mid Coast Road Services (“Diveva”). The defendant is Port Macquarie-Hastings Council (“Port Macquarie Council”).

Costs generally

1. [3]

   Section 98 of the Civil Procedure Act 2005 (NSW) relevantly reads:

2. [4]

   The Uniform Civil Procedure Rules 2005 (NSW), rules 42.1 and 42.2 read:

Background

1. [5]

   On or around 27 July 2011, the Council awarded Diveva a contract for the supply and lay of asphaltic concrete pursuant to Tender No: T-11-15 (“the Agreement”) (at TB 4) and the instrument of agreement (at TB 43).

2. [6]

   The contract was expressed to be for the supply materials and work to be carried out. The terms of the tender and the Agreement do not specify the amount of work that was required. The Agreement is expressed to be “for the supply and lay of asphaltic concrete with the Port Macquarie Hastings Council local government area.”

3. [7]

   Clause 10(c) provided:

4. [8]

   Prices were only fixed for a period of 12 months with a formal review to take place at the end of each 12 month period (Clause 11).

5. [9]

   It is the provision of an option that forms the basis of the dispute between the parties and this is reflected in the pleadings in the statement of claim.

6. [10]

   In March 2013, Port Macquarie Council resolved to let a new tender at the expiry of the two year period with updated specifications in March 2013 (see letter p 45 tender bundle). On or around 4 April 2013, Diveva attempted to exercise an option to renew the Agreement for a further 12 months. The purported exercise of the option recognises the need for renegotiation. Without a mechanism for determination between the parties of any disagreement, which the Agreement did not provide, the defendant argues that there could only be an agreement to negotiate, not an enforceable agreement.

7. [11]

   On or around 19 June 2013, Port Macquarie Council appointed a new panel of contractors to carry out the works.

8. [12]

   Diveva alleges that Port Macquarie Council is in breach of the Agreement. Port Macquarie Council denies that it is in breach of the Agreement and says that Diveva did not have the ability to unilaterally exercise the option.

The pleadings

1. [13]

   On 16 December 2013, Diveva filed a statement of claim against Port Macquarie Council alleging breach of contract and repudiation.

2. [14]

   On 20 January 2014, Port Macquarie Council filed a defence. At [24] and [25] it pleaded:

3. [15]

   It was paragraphs [24] and [25] of the defence that caused Diveva to elect to file the notices of motion, as those paragraphs seek the costs of rectification of the Lake Cathie works.

4. [16]

   On 28 January 2015, Port Macquarie Council’s solicitors wrote to Diveva’s solicitors stating:

5. [17]

   This offer was expressed to be a Calderbank v Calderbank [1975] 3 All ER 333 offer (Ex 1).

6. [18]

   On 2 February 2015, these motions came before me for hearing. The defendant in its submissions at [19] stated:

7. [19]

   On 2 February 2015, I adjourned the motions to 5 March 2015 before the Registrar. I ordered that costs be costs in the cause and the balance of the costs of the motions were reserved.

8. [20]

   On 4 March 2015, Port Macquarie Council filed the amended defence. Paragraphs [24] and [25] now plead:

9. [21]

   On 4 March 2015, Port Macquarie Council’s solicitors wrote to the Diveva’s solicitors with proposed consent orders (Ex 2). Paragraph [1] of those consent orders read:

10. [22]

    On 5 March 2015, the Registrar ordered the defendant to provide to the plaintiff further and better particulars in relation to paragraph [24] of the amended defence by 11 March 2015. The particulars were:

11. [23]

    The proceedings were then stood over for further directions on 12 March 2015.

12. [24]

    On 9 March 2015, Port Macquarie Council’s solicitors wrote to Diveva’s solicitors (after the Court order for the supply of particulars was made) (Ex A) and stated:

13. [25]

    On 24 March 2015, Port Macquarie Council’s solicitors wrote to Diveva’s solicitors (Ex A):

14. [26]

    It is my view that it was only when Port Macquarie Council particularised paragraph [24(a)], by specifying that Diveva had failed to undertake the works in accordance with the AUSSPEC C245, Section 32 Item (f), that it alleged breach of contract and that the pursuing orders sought in the motions became unnecessary.

Costs are discretionary

1. [27]

   I accept it is not known whether Diveva would have been successful and orders made to allow its expert access to the site located at Ocean Drive, Lake Cathie to undertake the Dynamic Cone Penetrometer Test and the Benkelman Beam Test. However, it is my view that the orders sought were appropriate at the time the motions were filed. The orders sought were rendered otiose on 24 March 2015. Diveva says that in these circumstances it was entitled to appear at Court today to seek its costs.

2. [28]

   Counsel for Port Macquarie Council referred to the Calderbank offer and submitted that it should have its costs from 28 January 2015 on an indemnity basis. That offer was that the notice of motion (relating to the penetration and beam tests being conducted) be dismissed with each party to bear its own costs. But by 28 January 2015, there were two motions running concurrently, the latter one seeking to join the party who supplied the asphalt for the Lake Cathie works. After 28 January 2015, Port Macquarie Council filed its amended defence (on 4 March 2015) and then provided proper particulars on 24 March 2015. It was not until the particulars were supplied that Diveva knew that the case it would have to meet would no longer include a claim for rectification of the works it carried out at Lake Cathie. It is my view that the appropriate order for costs in these circumstances is that Port Macquarie Council is to pay Diveva’s costs of the motions filed 21 August 2014 and 19 January 2015 on an ordinary basis as agreed or assessed.