The Owners – Strata Plan 98726 v Elite Realty Development Pty Ltd

In these proceedings, the plaintiff owners corporation sues the defendant builder, Elite Realty Development Pty Ltd, alleging defects in the common property of the premises of which it is the owners corporation.

Elite has made cross-claims against a number of parties including the applicant before me, United Consulting Engineers Pty Ltd.

The procedural history of the proceedings to date is summarised in the submissions of Mr Adair, who appeared for United, as follows:

As Mr Adair submitted, Elite has been disengaged from these proceedings from October of last year. The evidence before me shows that:

In those circumstances, by Notice of Motion filed on 5 April 2024, United seeks orders that Elite’s cross-claim against it be dismissed for want of prosecution, that United’s costs be assessed on a gross sum basis, and that the director of Elite, Mr Afyouni, pay $40,000 of those costs.

Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 12.7(1) enables the Court to, in appropriate cases, dismiss proceedings if the relevant moving party has not prosecuted the proceedings with due despatch. I am satisfied that that is a fair description of what has occurred here.

Added to the circumstances, to which Mr Adair has referred, is the fact that it appears that Elite was not present today when the matter was called through before Ball J earlier this morning, despite the fact that Mr Afyouni was copied in on an email to the parties from Ball J’s Associate notifying them of details of the telephone callover of the motion this morning.

Elite has not appeared before me. Against the possibility that, against the odds, Mr Afyouni is somewhere in the court today, I will qualify the order that I am about to make with an order granting Elite liberty to apply on short notice to seek to have the orders set aside. That order will be heavily qualified. I am otherwise satisfied that the proceedings should be dismissed under UCPR r 12.7(1).

United also seeks an order under s 98 of the Civil Procedure Act 2005 (NSW) that I make a gross sum costs order. The circumstances under which such an order may be made was recently summarised by Peden J in Bell v Hartnett Lawyers (No 4). [1] Many factors may be taken into account when considering to make a gross sum order. The factor relied on principally by United is that the evidence reveals that Elite appears to be in a parlous financial position and that it would not have the ability to meet the costs that would be incurred on assessment.

I must be satisfied that there is before the Court a reasonable basis upon which to make the cost assessment proposed. The evidence shows United’s actual costs to date, including disbursements, are in the order of $300,000. The figure sought is some $213,000. That figure has been calculated as being 70% of United’s actual costs and disbursements. United’s solicitor, Mr Knight, has deposed that in his experience, and indeed the Court’s, a successful party to litigation typically recovers something in the order of 70% to 80% of their solicitor/client costs and usually something in the order of 100% of counsel’s fees and expert’s fees. The figure proposed is in fact 70% of the total of United’s costs and disbursements which, in the circumstances, is a relatively conservative estimate. I am satisfied that I should make a gross sum costs order in the amount sought.

United also seeks a limited third party costs order against Mr Afyouni. In a judgment I published yesterday, [2] I summarised the principles relevant to the making of a third party costs order.

Another circumstance in which a third party costs order may be made is where the person against whom the order is sought can be seen to have been in control of the litigation and has caused the relevant party to conduct the proceedings in an unreasonable manner. It appears reasonable to infer that Mr Afyouni is the person who was responsible for the manner in which Elite has laterally conducted these proceedings, which, in my opinion, are relevantly unreasonable.

There is one particular circumstance relevant here. That is that Mr Afyouni, in the course of a security for costs application, gave an undertaking to the Court on 19 November 2021 to be personally liable to an amount of $40,000 for any costs order made against Elite. That appears to me to provide a separate reason why the order sought by United should be made.

In those circumstances I make the following orders: