Citation: A & P Parkes Constructions v Como Hotel Holdings [2004] NSWSC 792
Court: Supreme Court of New South Wales, Equity Division (Technology and Construction List)
Date: 20 August 2004
Judge(s): McDougall J
Background
A building contractor brought proceedings against a hotel owner for the cost of variations to a building contract. The referee appointed in the matter found that the contractor was entitled to judgment of $1,858,181.23. The original claim had been for approximately $4.99 million, and the defendant ultimately conceded liability for $576,737.46 of the total amount found due.
The completed premises, a hotel, had been in the defendant's use and occupation since early September 2001. The defendant had never disputed that the variation work was done, nor that it was done properly. Despite this, it declined to pay the amounts the contractor claimed.
After judgment on the substantive claim, the parties returned to court to resolve two remaining disputes: from what date interest should be awarded, and whether the plaintiff's costs should be reduced to reflect its partial success on quantum.
Legal Issues
- From what date should interest run, given that the plaintiff had not formally notified a claim for interest until proceedings commenced?
- Whether the court should withhold interest, or limit it to the date proceedings were commenced, on the basis that no interest claim had been notified earlier.
- Whether the plaintiff's costs should be reduced because it recovered substantially less than the amount it originally claimed.
- Whether the absence of a dominant severable issue affecting the quantum outcome was relevant to the costs decision.
Decision
On interest: McDougall J held that interest should run from 13 November 2001, being 21 days after the plaintiff's final payment claim of 16 October 2001. Although his Honour had earlier determined that the plaintiff was entitled to interest only at the statutory Schedule J rates rather than the higher contractual rate of 2 per cent per month, the contractual provision in clause 17(f) remained relevant to fixing the date from which interest accrued. The plaintiff's entitlement to payment had arisen no later than early September 2001, when the works reached practical completion.
The defendant argued, relying on Simonius Vischer & Co v Holt & Thompson and Anderson's (Pacific) Trading Co v Karlander New Guinea Line Ltd, that interest should run only from the commencement of proceedings because no interest claim had been formally notified earlier. McDougall J rejected this argument. Those cases concerned excessive delay between the making of a claim and its quantification, which justified limiting interest. No such delay existed here. The defendant had occupied and used the completed hotel since September 2001, had known of the claim since that time, and had retained the benefit of money the referee found was properly owed. His Honour noted that starting interest from 13 November 2001 was, if anything, generous to the defendant. A mathematical correction was also required to ensure interest after 29 June 2004 ran only on the balance remaining after the conceded amount was deducted.
On costs: The defendant contended that costs should be reduced because the plaintiff recovered only a fraction of what it had claimed. McDougall J declined to reduce the costs order. He found there was no dominant or severable issue that had caused the plaintiff to receive substantially less than its claim, and the defendant had made no offer of compromise and no Calderbank letter. Applying the approach in Abigroup v Peninsula Balmain and Mackinnon v Petersen, his Honour held that in building disputes, where quantification necessarily involves examining many individual items, a reduced costs order is not appropriate simply because the plaintiff fell short of the claimed amount, unless a clearly dominant issue drove that shortfall.
Orders Made
- The plaintiff was awarded interest from 13 November 2001, calculated on $1,858,181.23 up to 29 June 2004, and on the balance of $1,281,443.77 thereafter.
- The plaintiff was awarded its costs without reduction.
- The parties were directed to bring in short minutes of order within seven days to define the total judgment amount inclusive of interest.
Key Takeaways
- A court may look to a contractual interest provision to fix the date from which statutory interest runs, even where the plaintiff is not entitled to the contractual rate itself.
- The principle from Simonius Vischer limiting interest where there has been excessive delay in prosecuting a claim does not apply where the delay is not established and the defendant has had continuous benefit of the completed works throughout.
- In building and construction matters, a plaintiff's costs will not ordinarily be reduced merely because it recovered less than it claimed, absent a clearly dominant or severable issue that caused the shortfall.
- The absence of any offer of compromise or Calderbank letter by a defendant weighs against a submission that a successful plaintiff's costs should be reduced.
- Where interest calculations involve an earlier partial judgment, interest post-judgment must be recalculated on the outstanding balance only, not on the original total.
Legislation and Cases Referenced
Legislation:
- Supreme Court Rules, Pt 31 r 4 (entry of judgment on conceded liability)
- Supreme Court Rules, Pt 52A r 11 (costs)
- Section 94 (interest on judgments, applicable NSW legislation)
- Schedule J rates (statutory interest rates under the building contract regime)
Cases:
- Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322
- Anderson's (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870
- Forster v Farquhar & Ors [1893] 1 QB 564
- Cretazzo v Lombardi (1975) 13 SASR 4
- Abigroup v Peninsula Balmain (21 May 2003, unreported)
- Waters v PC Henderson Australia Pty Ltd (6 July 1994, unreported)
- Mackinnon v Petersen (19 April 1989, unreported)