Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Sky General Services Pty Ltd V Bauen Constructions Pty Ltd [2013] NSWCA 191
• Hearing dates: 19 June 2013
• Decision date: 19 June 2013
• Before: Barrett JA (at [1] and [18]); Gleeson JA (at [17])

Decision

Application for leave to appeal dismissed with costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: APPEAL - application for leave to appeal - no challenge to substantive result - contention that wrong conclusion reached on two of three alternative bases of determination - challenge to costs order only
• Legislation Cited: Building and Construction Industry Security of Payment Act 1999, ss 13(4), 17(2)
• Cases Cited: Chase Oyster Bar Pty Ltd v Hamo Pty Ltd [2010] NSWCA 190; (2010) 78 NSWLR 393; House v The King [1936] HCA 40; (1936) 55 CLR 499; Marshall v Prescott [2013] NSWCA 152
• Category: Interlocutory applications
• Parties: Sky General Services Pty Ltd - Appellant; Bauen Constructions Pty Ltd - Respondent
• Representation: Mr A T Lynch - Applicant; Mr D S Weinberger - Respondent; Lexi Fori Lawyers - Applicant; McCabes Lawyers Pty Ltd - Respondent
• File Number(s): 2012/354707

Decision under appeal

• Citation: [2012] NSWSC 1123
• Date of Decision: 2012-09-18 00:00:00
• Before: Sackar J
• File Number(s): 2012/230241

Judgment

1 BARRETT JA: This application for leave to appeal arises from a decision of Sackar J in the Equity Division of the Supreme Court, in proceedings in which Bauen Constructions Pty Ltd sought relief against Sky General Services Pty Ltd in respect of certain adjudications under the Building and Construction Industry Security of Payment Act 1999.

2 Sackar J decided that an adjudicator acting under that Act had fallen into jurisdictional error in three respects.

3 His Honour's first finding of error concerned the construction of s 13(4) of the Act and the calculation of the time period under that section.

4 The second finding concerned misdirection of the adjudicator of himself as to the correct statutory test under s 13(4), with the result that the adjudication was void.

5 Third, the judge dealt with an argument that there had been denial of procedural fairness because the adjudicator had failed to consider Bauen's adjudication response. That argument was upheld.

6 For each of three separate and independently articulated reasons advanced as alternatives, the judge ordered that the adjudicator's determinations be quashed, thereby granting the relief that Bauen had sought. In addition, the judge ordered that Sky pay Bauen's costs.

7 The case that Sky wishes to pursue in the Court of Appeal relates in a real sense to the costs order only. Sky notes that the judge dealt with the substantive matter on the three alternative bases I have mentioned. It accepts that a decision adverse to it was warranted on one of those bases, the procedural fairness basis, but maintains that there should have been no decision adverse to it on the other two bases - on the contrary, that it should have succeeded on those matters.

8 Sky further says that if the judge had dealt appropriately with those two matters, the correct outcome on costs would have been that costs were awarded by reference to the outcomes on the several issues, so that Sky was ordered to pay only part of Bauen's costs.

9 Sky says that leave to appeal is warranted because there is an important question of law at stake, namely whether compliance with s 13(4) of the Act involves a jurisdictional fact, in light of the decision in Chase Oyster Bar Pty Ltd v Hamo Pty Ltd [2010] NSWCA 190; (2010) 78 NSWLR 393. Sky apprehends that extrapolation from that case concerning s 17(2) is warranted and that a number of first instance decisions are therefore in doubt.

10 However, the relief that Sky would seek on appeal is confined to the order that it pay Bauen's costs, the ground being alleged error in the judge's decision so far as it concerned the two substantive issues on which Sky did not succeed. The sole purpose of the challenge to the decisions on the substantive issues would be to create a basis for a different costs order in an immediate sense.

11 The contention that there should have been apportionment of costs according to issues so that Sky was required to pay only part of Bauen's costs is not supported by any analysis of how much time was devoted to each issue, or how on a time or any other basis the apportionment should be made. This of course was not a case in which decisions on several issues combined to produce a final result. Each issue was determinative in its own right, there being several alternative arguments run in circumstances where Bauen had to succeed on only one to obtain the relief it sought.

12 In short, there is no clearly articulated basis of why it could be concluded that there should have been some different outcome on costs if the substantive issues had been decided as Sky now says they should have been. More importantly there is no explanation of why, on grounds of the House v The King [1936] HCA 40; (1936) 55 CLR 499 type, the discretion as to costs can be said to have miscarried.

13 It is appropriate to repeat here what was said by this Court earlier this month in Marshall v Prescott [2013] NSWCA 152 at [37]:

"There are two important and related reasons for refusing leave to appeal on the second aspect of the complaints concerning the costs orders. In the first place, it is not in the interests of justice for an appeal court to review and correct some part of the reasoning underlying a decision at first instance in circumstances where the party seeking review accepts the decision itself as correct. Having succeeded and therefore being content with the substantive outcome, a party is in no position to isolate discrete steps in the reasoning process and to ask that they be corrected. Second and in similar vein, a court will, in general, not try a hypothetical case for the sake of deciding a question of costs: Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622."

14 Those observations were made in circumstances where a successful party sought to challenge costs orders made on an issue-by-issue basis, its contention being that the judge had erred in his conclusions on some of the issues isolated for costs purposes, and that overall success entitled it to full costs. Here, as there, it would be a misapplication of scarce court time and resources to canvass substantive issues in a way that would leave the ultimate orders unchanged, and in that way to engage in a hypothetical review of substantive merits merely for the sake of costs.

15 To the extent (if any) that there may be some significant legal question of principle concerning the correct approach to and interpretation of s 13(4) of the Act, an appeal solely with respect to costs is not an appropriate vehicle to explore it.

16 The prospects of error of the judge of House v The King type being found are very remote. I am of the opinion that leave to appeal should be refused with costs.

17 GLEESON JA: I agree.

18 BARRETT JA: The order is therefore that the application for leave to appeal is dismissed with costs.

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Decision last updated: 26 June 2013