Cadence (90) Investments Pty Ltd v Aspire Constructions Pty Ltd; Aspire Constructions Pty Ltd v Cadence (90) Investments Pty Ltd (No 2)

1. [1]

   The principal judgment in this matter was published on 4 March 2026: Cadence (90) Investments Pty Ltd v Aspire Constructions Pty Ltd; Aspire Constructions Pty Ltd v Cadence (90) Investments Pty Ltd [2026] NSWSC 136 (Judgment). These reasons adopt the same abbreviations as in the Judgment and also assume familiarity with the reasons for Judgment.

2. [2]

   The parties were directed to seek to agree within 21 days short minutes of order which gave effect to the reasons for Judgment and on costs. The parties were unable to reach agreement on all aspects of the final orders.

3. [3]

   On 25 March 2026, the parties sought further time to provide submissions and evidence. An extension was granted until 2pm on 27 March 2026.

4. [4]

   The parties agree on the following orders:

5. [5]

   The following orders are agreed between Cadence, Aspire and Mr Kearns, (save for the underlined word which is proposed by Aspire and Mr Kearns), but are opposed by the Univenta Defendants:

6. [6]

   The parties did not oppose the proceedings being finalised on the papers. The key issues in dispute between the parties relating to final orders are as follows:

   1. (1)

      In respect of the amended summons (proposed order 1):

   2. (2)

      In respect of costs (proposed order 3):

   3. (3)

      Should interest on costs be awarded (proposed order 5)?

   4. (4)

      Should proposed orders 1, 2, 3 and 4 be stayed pending an appeal (proposed orders 7-8)?

7. [7]

   I deal with these issues in turn below.

Liability of Mr Kearns and the GST question

1. [8]

   Cadence correctly acknowledged that the effect of the findings at [532]-[534] of the Judgment is that Mr Kearns was found not to be liable to Cadence in respect of any of its claims against him personally, including in respect of the general building defect claims. Consequently, under order 1, Cadence should have judgment against Aspire alone and [471], [528], [531] and [538] will be corrected under the slip rule and some other typographical errors will also be corrected.

2. [9]

   Aspire claimed that Cadence should have judgment against it in the sum of $67,630.89 and not the sum of $72,288.38 inclusive of GST. It contended that GST is not payable on the damages award in circumstances where Cadence is eligible to receive an input tax credit in respect of its expenses. Aspire contended that Cadence as trustee for the GDC Discretionary Trust was eligible to receive an input tax credit between 16 January 2020 and 30 September 2024.

3. [10]

   Cadence contended that the relevant judgment sum should include GST because although it was registered for GST during the specified period, based on accounting advice, it was not eligible to claim nor did it claim any input tax credits in respect of building works or rectification costs, nor was it proposing to claim any such tax credits. Accordingly, it contended that GST on these matters was a real cost and loss to it.

4. [11]

   I accept Cadence’s submissions. They are supported by Mr Cronin’s affidavit sworn on 27 March 2026, which includes a copy of the accountant’s taxation advice which is to the effect summarised above.

5. [12]

   For these reasons, order 1 should be substantially in the form proposed by Cadence.

Costs

1. [13]

   Although Aspire and Mr Kearns did not dispute that it was appropriate to order Cadence to pay 90% of Aspire’s costs of the amended summons (which is not opposed by Cadence), Aspire and Mr Kearns submitted that Cadence should pay all of Mr Kearns’ costs without any reduction because there was no finding of liability against him. I accept that submission.

2. [14]

   All four defendants sought indemnity costs, relying on joint offers made between 23 February 2023 and 8 March 2023. The joint offers are dated 23 February 2023, 27 February 2023, 2 March 2023 and 8 March 2023. The first three offers were said to be made pursuant to r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and alternatively, as Calderbank offers. The fourth offer was made as a Calderbank offer only. In addition, the Univenta Defendants rely on a Calderbank offer made by them in a letter dated 18 July 2025.

3. [15]

   In their undated outline of submissions on final orders, Aspire and Mr Kearns acknowledged at [49] that the joint offers did not comply with the UCPR and they do not rely upon them as offers made under the Rules. In their outline of submissions on final orders filed on 27 March 2026, the Univenta Defendants adopted the submissions of Aspire and Mr Kearns and made several additional points, none of which claim reliance on r 20.26 of the UCPR. Accordingly, it is sufficient to focus on the issue whether indemnity costs should be ordered against Cadence under the Calderbank principles.

4. [16]

   The parties’ submissions generally focused on the offer dated 8 March 2023. The defendants’ proposed orders also stated that costs should be awarded “on an indemnity basis on and from 9 March 2023”. In those circumstances, it is appropriate to focus on whether Cadence’s rejection of the joint offer dated 8 March 2023 justifies a special costs order. No party suggested that the Court’s determination of whether indemnity costs should be awarded on the basis of that rejected offer did not also apply to the earlier offers.

5. [17]

   The Calderbank principles are well-established and may be summarised as follows:

   1. (1)

      There is no presumption that an offeree who does not accept a Calderbank offer and does not obtain a more favourable judgment will necessarily have to pay indemnity costs from the date of the offer. The Court must determine whether there was a genuine offer of compromise and whether it was unreasonable for the offer not to have been accepted (see Tati v Stonewall Hotel Pty Ltd (No 2) [2012] NSWCA 124 at [9]-[10] per Bathurst CJ, Allsop P and Beazley JA agreeing).

   2. (2)

      The onus is on the offeror to demonstrate that it was unreasonable for the offeree to reject the offer, having regard to relevant surrounding circumstances, which include:

6. [18]

   Cadence submits that it was not unreasonable for it to have rejected the joint offers of settlement and, in particular, the offer made on 8 March 2023. That particular offer was the fourth offer made by the defendants. All the defendants’ offers were made when Cadence and Aspire were involved in adjudication proceedings under the Building and Construction Industry Security of Payment Act 1999 (NSW). The adjudication proceedings were expected to be determined in late March 2023. The joint offers were made before evidence had been served in the court proceedings and prior to Aspire filing a cross-claim on 26 May 2023 (which was later amended on 8 February 2024). The fourth offer had the following key elements:

   1. (1)

      the defendants would pay Cadence $200,000;

   2. (2)

      the parties would execute a Deed of Settlement and Release, a copy of which was attached to the 8 March 2023 letter (Deed). The Deed included a release by the defendants to Cadence in respect of all claims that they may have against Cadence arising from, or in connection with, the subject matter of the court and adjudication proceedings, the Building Contracts, and the work undertaken by or on behalf of the defendants at 200 and 268 Bunkers Hill Road. It should be noted, however, that the adjudication proceedings involved more claims by Aspire than were subsequently raised by it in the cross-claim filed on 26 May 2023 (and amended on 8 February 2024); and

   3. (3)

      the offer was open for acceptance until 5pm on 9 March 2023.

7. [19]

   For the following reasons, I consider that it was not unreasonable for Cadence to reject the fourth offer.

8. [20]

   First, the fourth offer (and naturally all the joint offers that preceded it) was made before any evidence had been served in the court proceedings and before the filing of Aspire’s cross-claim. Although Cadence had by that time obtained (but not served) a copy of Dr Piechowski’s first report, it had not yet seen any of Dr Kivi’s expert reports.

9. [21]

   Secondly, one of the matters to consider in determining whether indemnity costs should be ordered following a Calderbank letter is the relevant strengths and weaknesses of each party’s case, as might have been apparent to the parties when the offer was made (see South Eastern Sydney Area Health Service v King [2006] NSWCA 2 at [90] per Hunt AJA, Mason P and McColl JA agreeing). None of the defendants’ lay and expert evidence had been served when the joint offers of settlement were made. That material was plainly important in assessing prospects.

10. [22]

    Thirdly, the fourth offer was made on terms that required Cadence to provide releases and indemnities that went beyond the scope of the Court proceedings. This is reflected in cll 4.1 and 4.5 of the terms of the Deed, which are not confined to the Supreme Court Proceedings as defined:

11. [23]

    Although there is no inflexible rule, I consider that it was reasonable for Cadence to reject the fourth offer in circumstances where it was required to accept as a term of the compromise a degree of liability related to matters extraneous to the proceedings and beyond the claims made (see Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Limited (formerly GIO Insurance Limited) [2006] NSWSC 583 at [73]-[74] per Einstein J; Galati v GC NSW Pty Ltd (No 2) [2020] NSWSC 420 at [74] per Robb J).

12. [24]

    Fourthly, there is no dispute that the fourth offer was a genuine and real compromise, hence nothing more needs to be said about that consideration.

13. [25]

    For all these reasons, the defendants have not satisfied me that it was unreasonable for Cadence to reject the fourth offer, that offer being the focus of the defendants’ proposed final orders concerning indemnity costs. Most, if not all these reasons also apply to the previous joint offers.

14. [26]

    Finally, for completeness, I do not accept Cadence’s submission that it was given insufficient time to consider the fourth offer. As noted above, although the offer was only open a little more than one day, Cadence’s lawyers responded within that timeframe and explained why the offer was not accepted. Even though, for the first time, the fourth offer attached the Deed which was a complex document and totalled approximately 20 pages, Cadence was able to put forward proposed amendments to the Deed as part of its counter-offer dated 9 March 2023.

15. [27]

    Apart from relying on the four joint offers, the Univenta Defendants also sought indemnity costs based on an offer of compromise dated 18 July 2025 which expressly relied on the Calderbank principles. In that letter, the Univenta Defendants pointed to the fact that evidence had then been filed by the parties, including two reports by Dr Kivi and two reports by Mr Madden. Based on all the filed evidence, the Univenta Defendants claimed in the letter that the Court was likely to find in their favour on the following matters:

16. [28]

    Many of these matters were ultimately determined in favour of the Univenta Defendants in the Judgment. Of course, it was not until the trial that the defendants became aware of the nature and extent of Mr Cronin’s involvement in preparing and finalising Dr Piechowski’s expert reports, but it can reasonably be inferred that Mr Cronin and Cadence’s legal representatives (who were copied in with most of the communications passing between Mr Cronin and Dr Piechowski) ought to have appreciated that this was likely to affect adversely the weight which the Court might give to Dr Piechowski’s evidence where it was inconsistent with that of Dr Kivi.

17. [29]

    In the 18 July 2025 letter, the Univenta Defendants no longer relied upon the earlier Deed attached to the fourth offer but instead proposed that:

    1. (1)

       they would enter into a deed with Cadence which would involve the Univenta Defendants paying Cadence a settlement sum in the amount of $95,675.69 within 28 days of executing the deed;

    2. (2)

       Cadence would file a notice of discontinuance against the Univenta Defendants within three days of receipt of the settlement sum;

    3. (3)

       the proposed deed would include what was described as usual terms containing mutual confidentiality obligations, mutual non-disparagement clauses and mutual releases; and

    4. (4)

       the offer was stated to be open for acceptance until 5pm on 23 July 2023 (i.e. being 5 days).

18. [30]

    In its written reply submissions dated 2 April 2026, Cadence submitted that it was not unreasonable to reject the fourth offer in circumstances where, at the time it was made, a copy of Dr Kivi’s report dated 1 November 2024, which addressed the Main House only and not the 368D House and Tourist Cabin, had been served and it was not until 7 October 2025 that Dr Kivi’s report addressing those other two buildings were served. Cadence emphasised that when the Univenta Defendants then sought leave to rely upon that report in response to Dr Piechowski’s reports, they submitted that Dr Kivi’s latest report was “essential to the defendants’ case” and that “without that evidence, the defendants will be unable to meet the plaintiff’s case as to those two buildings”.

19. [31]

    I accept Cadence’s submissions. Although the primary focus of the case was on the Main House, the other two buildings were not merely ancillary or incidental. Each had its own particular features, including for example, in the case of the Tourist Cabin, the issue of the positioning of the ground loops in the nearby dam.

20. [32]

    For these reasons, I consider that Cadence should pay the Univenta Defendants’ costs on the ordinary basis.

21. [33]

    I will later address the question whether these costs should be in a gross sum as sought by Univenta Defendants.

22. [34]

    In its written submissions filed 27 March 2026, the Univenta Defendants described their “primary position” on costs as being that Cadence should be ordered to pay their costs on an indemnity basis from the start of the proceedings (i.e. August 2022) because of Cadence’s delinquent conduct. They further contended that the relevant delinquency was to be found in Mr Cronin’s inappropriate and extensive involvement in the preparation and finalisation of Dr Piechowski’s expert reports and in Dr Piechowski's failure to disclose the nature and extent of Mr Cronin’s involvement, matters which are discussed at some length in the Judgment.

23. [35]

    I do not accept those submissions. As the Judgment makes clear, Cadence’s failure to succeed on its geothermal claims was based upon the Court’s strong preference for Dr Kivi’s evidence over that of Dr Piechowski. The failure to disclose the nature and extent of Mr Cronin’s inappropriate involvement in the preparation and finalisation of Dr Piechowski’s expert report is ultimately Dr Piechowski's responsibility, not Cadence’s.

24. [36]

    More significantly, however, I accept Cadence’s submission that the geothermal issues relating to the 368D House and Tourist Cabin were not addressed in any substantive way until Dr Kivi’s report prepared his report dated 7 October 2025. Furthermore, the Joint Report by Dr Piechowski and Dr Kivi was not produced until 30 October 2025 following Dr Piechowski's fourth report dated 27 October 2025.

25. [37]

    Having regard to all these matters, I find that Cadence did not act unreasonably in maintaining its geothermal claims up to and including the commencement of the hearing when the parties were still actively developing their respective positions.

26. [38]

    For these reasons, I do not accept the Univenta Defendants’ claim for indemnity costs based on delinquency.

Apportionment of costs

1. [39]

   Cadence did not contest the Court’s preliminary view at [539] of the reasons for Judgment that it should pay 90% of Aspire’s costs in respect of the amended summons. I have explained above why I think it is appropriate that Cadence should bear all of Mr Kearns’ costs on the ordinary basis in respect of the amended summons.

2. [40]

   Cadence submits that it should pay only 1/3 of Aspire’s costs as opposed to the figure of 50% tentatively expressed in the Judgment at [539]. It said that this amount more accurately reflects the fact that the amended cross-claim raised three distinct claims, namely, moneys owing under the Building Contracts in respect of sub-contractor invoices; the balance of the builders’ margin on the basis of an accrued right; and, alternatively, the builders’ margin as damages for repudiation.

3. [41]

   I do not accept that analysis. I prefer Aspire’s position, which is to the effect that the amended cross-claim was comprised of two components, namely reimbursement for work performed in the total amount of approximately $151,000 and a claim for the balance of the builder’s margin of approximately $44,500, which was due on either the basis of an accrued contractual right or Cadence having repudiated the Building Contracts. Aspire succeeded on all but $9,000 in relation to the first component and failed entirely on the second. But the second component took up far less time and resources than the first component and Aspire enjoyed considerable success in respect of the first component when assessed on a monetary basis.

4. [42]

   For these reasons, I consider that Cadence should pay 50% of Aspire’s costs of the amended cross-claim on the ordinary basis.

Gross sum costs order

1. [43]

   As noted above, the Univenta Defendants sought a gross sum costs order in relation to any costs order in their favour. They relied upon the history of the proceedings as indicating that any assessment of costs would be protracted and contested and would add to the expense, delay and aggravation between the parties (see A.C.N. 627 087 030 Pty Ltd v Poche (No 2) [2026] NSWCA 29 at [44] per Ward P).

2. [44]

   As to the amount of a gross sum costs order, I am mindful of what von Doussa J said in Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 123-4, that the Court needs to be “confident that the approach taken to estimate costs is logical, fair and reasonable” but, once that threshold is crossed, the gross sum can be “fixed broadly having regard to the information before the Court”, as long as the parties have been heard and there is adequate information.

3. [45]

   The Univenta Defendants relied upon a detailed affidavit dated 27 March 2026 by their instructing solicitor, Ms Amber Bernauer. Ms Bernauer provided the following Table at [39] of her affidavit in respect of the Univenta Defendants’ claim for a gross sum costs order relating to the total costs and disbursements calculated on the ordinary basis from the start of the proceeding.

4. [46]

   In a detailed exhibit to the affidavit, Ms Bernauer set out tables which summarise the invoices underpinning these figures.

5. [47]

   As is evident from the Table, Ms Bernauer applied a discount of 40% to solicitor costs and 20% to disbursements. Although Mr Bernauer did not attach copies of actual invoices, she provided detailed particulars of invoices upon which the Table is based, including numbered invoices from counsel, solicitors, the experts and the mediator. The particulars provided in respect of the invoices relating to solicitor fees included the hours worked for which fees were charged and the hourly rate of the relevant practitioner excluding GST.

6. [48]

   I consider Ms Bernauer’s approach to be logical and reasonable. I reject Cadence’s submission that more information is required for the Court to be satisfied of an appropriate lump sum figure, including production of the relevant primary record. There is authority for the proposition that the Court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment (see Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99 at [28] per Basten, Gleeson and Leeming JJA).

7. [49]

   Accordingly, I will order Cadence to pay the costs of the Univenta Defendants in the gross sum of $326,368.19 as sought by them.

Interest on costs

1. [50]

   Aspire and Mr Kearns seek an order for interest to be paid on costs from the earlier of the date of the final orders or the date of payment of the costs. Under s 101(4) of the Civil Procedure Act 2005 (NSW), unless the Court orders otherwise, interest is payable on an amount payable under an order for the payment of costs and s 101(5) provides that such interest is to be payable from the date of the order or any other date that the Court orders.

2. [51]

   Aspire and Mr Kearns submit that interest should be paid on costs from the date that the costs were paid by them in circumstances where these proceedings were commenced in 2022, they have been out of pocket for legal costs and disbursements for that period and they could have otherwise spent the money on Aspire’s business rather than on legal costs and disbursements.

3. [52]

   I accept those reasons but consider that where Cadence has also enjoyed some, albeit a lesser measure of, success, the order for interest on costs should apply equally, as is reflected in Cadence’s proposed order 5.

Stay of orders pending an appeal

1. [53]

   In its written submissions dated 27 March 2026, Cadence submitted that its proposed order 7 (which provides for an interim stay) was agreed. Although it appears that Aspire and Mr Kearns broadly agreed with proposed order 7, subject to the qualification referred to at [5] above, the Univenta Defendants explicitly stated in their written submissions filed 27 March 2026 in footnote 2 that they oppose the stay sought by Cadence. They did so on the basis that a stay would affect the timing of their commencement of a cost assessment if they failed to obtain a gross sum order.

2. [54]

   This objection now falls away. I am satisfied that an interim stay should be put in place along the lines of the amendments proposed by Aspire and Mr Kearns in their proposed orders 7 and 8.

Conclusion

1. [55]

   For all these reasons, the Court will make the following orders:

   1. (1)

      In respect of the plaintiff’s amended summons filed 14 June 2023 (the amended summons):

   2. (2)

      In respect of the cross-claimant’s amended cross-summons filed 8 February 2024 (the amended cross-summons):

   3. (3)

      Subject to Order 4 below:

   4. (4)

      Nothing in order 3 affects or varies the following prior interlocutory costs orders, which remain in full force and effect:

   5. (5)

      In respect of the costs ordered in order 3 above and prior costs orders referred to in order 4 above, pursuant to s 101(5) of the Civil Procedure Act 2005 (NSW), the Liable Party is to pay interest on the Favouree’s costs and disbursements:

   6. (6)

      The plaintiff and first defendant have liberty to set off the amounts payable as between them pursuant to orders 1 and 2 above.

   7. (7)

      Enforcement of orders 1, 2, 3 and the interlocutory orders referred to in order 4 are stayed for a period of 28 days from the date of these orders.

   8. (8)

      In the event that a notice of appeal is filed by either party, enforcement of orders 1, 2, 3 and the interlocutory orders referred to in order 4 be stayed for a period of 7 days from the date of filing of the notice of appeal.