Supreme Court New South Wales Medium Neutral Citation: Grandview Ausbuilder Pty Ltd v Budget Demolitions & Excavations Pty Ltd (No 2) [2020] NSWSC 1307 Hearing dates: 6 and 7 August 2020. Last written submissions 28 August 2020. Date of orders: 25 September 2020 Decision date: 25 September 2020 Jurisdiction: Equity Before: Henry J Decision: See paragraph [210] Catchwords: CIVIL PROCEDURE – Pleadings – Striking out – No reasonable cause of action or defence – Tendency to cause embarrassment – whether plaintiff's claims should be struck out or dismissed – where plaintiff claims liquidated damages for delay, damages for failure to complete contract works, restitution for overpayments and an entitlement to set-off debts due to the defendant – plaintiff's claims struck out in part CIVIL PROCEDURE – Technology and Construction List – Entry in – where it is unknown whether proceedings will remain in the Supreme Court of NSW – proceedings not transferred to construction list CIVIL PROCEDURE – application to re-open case – where plaintiff seeks leave to tender a deed of company arrangement and affidavit from administrator – leave to tender deed granted – where administrator's affidavit of limited probative value – leave to tender affidavit refused CORPORATIONS – Voluntary administration – Deed of company arrangement – whether defendant has been granted leave under s 444E(3) of the Corporations Act 2001 (Cth) to bring its cross-claim and proceed with motion for judgment – whether leave should be granted and judgment entered – where defendant seeks judgment on payment claim and plaintiff failed to pay or provide a payment schedule – judgment ordered on condition defendant not entitled to execute against plaintiff's assets Legislation Cited: Building and Construction Industry Security of Payment Act 1999 (NSW), ss 15(2)(a)(i), 15(4)(b)(ii), 31(1)(a), 32 Civil Procedure Act 2005 (NSW), ss 56 to 58, 98, 100 Corporations Act 2001 (Cth), ss 109X(1)(b), 440D(1), 444D(1), 444E(3), 435C(1)(b), 435C(2)(a) Uniform Civil Procedure Rules 2005 (NSW), rr 2.1, 13.4, 14.28(1), 42.1, 42.7 Cases Cited: Adelaide Brighton Cement Limited, in the matter of Concrete Supply Pty Ltd v Concrete Supply Pty Ltd (subject to deed of company arrangement) [2018] FCA 315 Attard v James Legal Pty Limited [2010] NSWCA 311 Australian Securities and Investments Commission v Rich (2006) 235 ALR 587; [2006] NSWSC 826 Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2005) 62 NSWLR 385; [2005] NSWCA 49 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69 Grandview Ausbuilder Pty Limited v Budget Demolitions & Excavations Pty Limited [2020] NSWSC 343 Grandview Ausbuilder Pty Limited v Budget Demolitions Pty Limited [2018] NSWSC 1647 Grandview Ausbuilder Pty Limited v Budget Demolitions Pty Limited (2019) 99 NSWLR 397; [2019] NSWCA 60 Hill v Esplanade Wollongong Pty Ltd ACN 141 133 708 (subject to a deed of company arrangement) [2018] NSWSC 478 Hoath v Connect Internet Services Pty Ltd [2006] NSWSC 158 In the matter of Grandview Ausbuilder Pty Limited (administrator appointed) [2019] NSWSC 1243 In the matter of Grandview Ausbuilder Pty Limited (subject to deed of company arrangement) (Supreme Court (NSW), Rees J, 20 December 2019, unrep) Josia v Horvat Constructions [2004] NSWSC 1252 McGuirk v University of New South Wales [2009] NSWSC 1424 Mehan v Arrium Limited (formerly OneSteel Ltd) [2016] NSWSC 1680 O'Brien v Bank of Western Australia [2013] NSWCA 71 Probuild Constructions (Aust) Pty Limited v DDI Group Pty Limited (2017) 95 NSWLR 82; [2017] NSWCA 151 Re Antqip Hire Pty Limited (subject to deed of company arrangement) (in liq) [2020] NSWSC 487 Re QMT Constructions Pty Ltd [2000] 1 Qd R 284; [1999] QSC 2 Shaw v KPR Recruitment Australia Pty Ltd (No 2) [2017] NSWSC 707 Shelton v National Roads and Motorists Association Limited [2004] FCA 1393 Simmons v NSW Trustee and Guardian [2014] NSWCA 405 Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28 Taouk v Assure (NSW) Pty Ltd [2019] NSWCA 224 The Owners – Strata Plan No 74602 v Brookfield Australia Investments Ltd [2015] NSWSC 1682 Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 478 Wendt v Bruce (1931) 45 CLR 245; [1931] HCA 9 White Industries Australia Limited v Federal Commissioner of Taxation (2007) 160 FCR 298; [2007] FCA 511 Texts Cited: JW Carter, Contract Law in Australia (7th ed, 2018, LexisNexis Butterworths) at [31-05] Category: Procedural and other rulings Parties: Grandview Ausbuilder Pty Ltd (Plaintiff/Cross-Defendant) Budget Demolitions & Excavations Pty Ltd (Defendant/Cross-Claimant) Representation: Counsel: V Culkoff (Plaintiff/Cross-Defendant) N Allan (Defendant/Cross-Claimant) Solicitors: Julie A Orsini (Plaintiff/Cross-Defendant) Ziman & Ziman (Defendant/Cross-Claimant) File Number(s): 2019/58536 Publication restriction: Nil Judgment 1. Before me for hearing on 6 August 2020 were two notices of motion; the first filed by the defendant/cross-claimant, Budget Demolitions & Excavations Pty Ltd (Budget), seeking to strike out and dismiss the claims of the plaintiff/cross-defendant, Grandview Ausbuilder Pty Ltd (Grandview), and to obtain judgment on its cross-claim; the other motion filed by Grandview seeking to have the proceedings transferred to the technology and construction list of this Court. 2. The disputes between the parties arise out a construction contract between Grandview, as head contractor, and Budget, as sub-contractor, for demolition and excavation works at a development being constructed by Grandview at Villawood (sub-contract). 3. In these proceedings, Grandview sues on the sub-contract, claiming $1,445,093 from Budget, comprising of liquidated damages for delay, damages for the cost to complete the sub-contract works, restitution of overpayments and set-off claims against debts and damages due from Budget to Grandview. Budget has cross-claimed against Grandview, seeking payment of $526,045.26 plus interest based on a payment claim served in December 2017 under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SoP Act). 4. The disputes between the parties have also led to statutory demand and winding up proceedings in this Court. On 12 August 2019, an administrator, Mr Ian Bailey, was appointed to Grandview. Since 30 September 2019, Grandview has been operating under a Deed of Company Arrangement (DOCA). Issues for determination 1. Budget's notice of motion, filed on 30 April 2020, seeks orders that: 1. Grandview's claims be dismissed because of its failure to provide security for Budget's costs in accordance with an order made by Parker J for Grandview to provide security in an amount of $21,000 by 15 April 2020: Grandview Ausbuilder Pty Ltd v Budget Demolitions & Excavations Pty Ltd [2020] NSWSC 343 (security for costs judgment); 2. Grandview's amended statement of claim filed on 22 October 2019 (ASC) be struck out pursuant to r 14.28(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and its claims for relief be dismissed pursuant to r 13.4 of the UCPR; and 3. Grandview's defence to Budget's cross-claim filed on 23 March 2020 be struck out pursuant to r 14.28(1) of the UCPR, judgment on Budget's cross-claim be entered in the amount of $526,045.26 pursuant to s 15(2)(a)(i) of the SoP Act and pre-judgment interest from 1 March 2018 be awarded pursuant to s 100 of the Civil Procedure Act 2005 (NSW). 1. At the hearing, Budget did not press that part of its motion seeking to dismiss Grandview's claims for failure to provide security for costs. Budget accepts that the bank guarantee provided by Grandview on 8 May 2020 in favour of the Supreme Court of New South Wales for $21,000 is adequate security despite being provided late and, Budget says, not otherwise in accordance with Parker J's orders. The only issue for determination in relation to that part of Budget's motion is costs. 2. The other orders sought by Budget's motion are contested by Grandview. 3. Following the hearing, Grandview made an application for leave to re-open to rely on the DOCA and an affidavit by Mr Bailey sworn 10 August 2020. Grandview contends that those documents are relevant to the Court's consideration of Budget's application for judgment on its cross-claim. Budget objects to the tender of Mr Bailey's affidavit. 4. The parties have provided supplementary written submissions in relation to Grandview's application for leave to re-open and the issue of whether Budget has been, or should be, granted leave under the Corporations Act 2001 (Cth) (Corporations Act) to pursue judgment on its cross-claim. 5. Thus, the issues for determination are: 1. whether Grandview's ASC should be struck out and its claims for relief dismissed because they disclose no reasonable cause of action or have a tendency to cause prejudice or embarrassment; 2. if all or part of Grandview's ASC is struck out, whether Grandview should be granted leave to re-plead; 3. whether the proceedings should be transferred to the Technology and Construction list of this Court; and 4. in relation to Budget's cross-claim: 1. whether Grandview should be granted leave to re-open to tender a copy of the DOCA and Mr Bailey's affidavit; 2. whether Budget has been granted leave by the Court to bring the cross-claim and, if not, whether leave should be granted nunc pro tunc under s 444E(3) of the Corporations Act; and 3. if leave is granted to Budget to proceed with its cross-claim, whether judgment should be entered for Budget in the amount of $526,045.26 pursuant to s 15 of the SoP Act and for pre-judgment interest on that sum from 1 March 2018. Background 1. The following is taken from the allegations made in the pleadings, the affidavits and documents in evidence at the hearing on 6 August 2020 and other judgments of this Court. I make no findings on any contentious issue of fact in the proceedings, but set out the background as it emerges from those materials. The sub-contract, Budget's works and termination 1. The sub-contract between Grandview and Budget was made on 19 June 2017. It provided for a Sub-Contract Sum of $2,314,581 with a Completion date that "shall not exceed 12 December 2017": cl 1A; items 6 and 12 of Annexure A to the General Conditions. 2. The sub-contract also provided that: 1. if Budget fails to achieve completion of the whole of the subcontract works by the date for practical completion and the sub-contract is terminated under clauses 40 or 42, Budget will be liable to pay Grandview liquidated damages as a debt due and owing at the rate of $4,000 plus GST per day for every day after the Contractual Completion date to the date of termination: cl 30(a); item 15(a) of Annexure A; 2. Grandview may, in its discretion, demand and deduct payment of liquidated damages from any amount otherwise payable to Budget and a failure by Grandview to do so or set off the liquidated damages will not amount to a waiver of or otherwise affect Grandview's rights and entitlements: cl 30(b); 3. variations to the work under the sub-contract are to be authorised in writing by Grandview's representative and are to be valued in accordance with the procedures set out in cl 36(f): cl 36; 4. Budget shall claim payment for work done progressively, on the 21st day of each month, with each progress claim showing details of the value of the work done, including Variations: cl 37(a); item 7 of Annexure A; 5. Grandview may deduct from moneys due to Budget any money due from Budget to Grandview: cl 39; 6. if either party breaches or repudiates the sub-contract, nothing in cl 40 shall prejudice the right of the other to recover damages or exercise any other right: cl 40(a); 7. substantial breaches of the sub-contract include, but are not limited to, failure by Budget to proceed with due expedition and without delay, wrongful suspension of work by Budget and failures by Grandview to make any payment due and payable to Budget: cl 40(c) and cl 40(d); 8. if a party commits a substantial breach, the other party may give them a written notice to show cause. If Budget is the party that fails to show reasonable cause, Grandview may terminate the sub-contract. If Grandview is the party that fails to show reasonable cause, Budget may suspend works and, if Grandview does not remedy the breach within 21 days of being given notice of suspension, terminate the sub-contract: cl 40(b), cl 40(e) and cl 40(g); and 9. if the sub-contract is terminated pursuant to cl 40, the rights and liabilities of the parties shall be the same as they would have been at common law had the defaulting party repudiated the sub-contract and the other party elected to treat it as at an end and recover damages: cl 40(h). 1. In June 2017, Budget commenced the sub-contract works at the Villawood site (Site). 2. On 27 July 2017, Budget issued its first invoice and payment claim under the SoP Act, which was paid in full by Grandview. It continued with works on the Site and issued another invoice on 24 August 2017 which included claimed variations which were rejected by Grandview. 3. Grandview claims that, on 5 September 2017, Budget wrongfully suspended work at the Site. Grandview also claims that, from that day until 12 December 2017, Budget failed to perform the works required by the sub-contract and that, in breach of the sub-contract, Budget failed to reach practical completion by the practical completion date of 12 December 2017: ASC at [8], [9] and [10]. 4. Budget denies that it wrongfully suspended the sub-contract works in September 2017. It contends that Grandview prevented Budget from continuing with its excavation works by not disconnecting a sewer line from the Site, that Grandview directed Budget to stop work on 11 September 2017, and that Budget resumed work in October 2017. Budget does not admit that 12 December 2017 is the practical completion date but accepts that the sub-contract works were not, as at that date, in a state of practical completion: Defence to ASC at [8], [12.1] and [12.2]. 5. On 21 November 2017, Budget issued invoice P33005 to Grandview as a progress claim under the sub-contract and a payment claim under the SoP Act for work undertaken on Site for $498,528.10 (including GST) (Nov payment claim). 6. On 20 December 2017, Peter Liu, Grandview's representative under the sub-contract (item 3 of Annexure A), sent an email to Sam Habib (Budget's director) and others at Budget advising that, due to the holiday season, the Site would be closed from Friday 22 December 2017 to 4 February 2018, and Site work would resume on 5 February 2018. The email also stated that: From all of the team at Grandview, we look forward to continue working with you throughout 2018. 1. On 21 December 2017, Budget issued invoice P33006 to Grandview as a progress claim under the sub-contract and a payment claim under the SoP Act for work undertaken on Site for $526,045.26 (including GST), comprising $473,767.96 (excluding GST) and further work on anchoring variations of $4,455 (excluding GST) (Dec payment claim). It is not in dispute that Grandview did not respond to the Dec payment claim within the 10 day period allowed under the SoP Act (s 14(4)) and that the amount remains unpaid. 2. On 3 January 2018, Budget sought to continue the sub-contract works on the Site. Budget's Site Foreman, Lyle Whiteman, gives evidence that, on 3 January 2018, Budget was told by Grandview's representative, Wilson Chen, to stop work and, on 4 January 2018, Mr Chen told Mr Whiteman that he had called the police. A site meeting then occurred and Mr Chen agreed to Budget finishing work that day. 3. On 31 January 2018, Mr Habib sent an email to jason@grandviewco.com.au, may@grandviewco.com.au and sharon@grandviewco.com.au attaching a Notice of Suspension made under the SoP Act. "Jason" is Jason Zhang, Grandview's sole director at that time. The Notice of Suspension is marked to the attention of "Grandview Ausbuilder Pty Ltd" and purports to give notice of Grandview's intent to suspend works on Site under s 27 of the SoP Act on the ground that Grandview had failed to pay the Nov payment claim, with the suspension beginning two business days after receipt of the notice unless payment was made. 4. Also on 31 January 2018, Budget issued and served on Grandview a statutory demand totalling $1,024,573.36 based on the Nov and Dec payment claims. 5. On 1 February 2018, Frank Lin from Grandview sent an email to Mr Habib advising that the Site work will not resume on Monday 5 February 2018 until further notice from Grandview. 6. On 6 February 2018, Jason Zhang from Grandview sent an email to Mr Habib, copied to Mr Lin, in the following terms: i am in china, there is time differents [sic] and maybe Some technical issue, My australian number doesn't working [sic] properly in china. We are still working on s96 and new DA, According to council, it might take more than three months. I am aware you have one Claim overdue. but we have some issues on that claim, I need to discuss with peter, when I back to sydney. Do not waste money on your lawyer, we can fighting [sic] on the court for a year, get same result. let's sit down talk about how to pay you. That will save you a lot of legal fee. Try to call me after Lunch time, Don't too earlier, There is time difference between china and australia. 1. On 20 February 2018, Grandview commenced proceedings seeking to set aside Budget's statutory demand (statutory demand proceedings). 2. On 5 March 2018, Grandview served Budget with a Notice to Show Cause pursuant to cl 40 of the sub-contract: ASC at [14]. 3. Between 13 and 17 March 2018, Budget removed its equipment from the Site, which Grandview asserts was a repudiation of the sub-contract by Budget: ASC at [15], Reply at [8iii] and [8iv]. 4. On 9 April 2018, Grandview purported to terminate the sub-contract, including by reason of Budget's repudiation of the sub-contract: ASC [15]; Reply at [8]. Budget denies that Grandview terminated the sub-contract. : Defence to ASC at [16]. 5. Grandview asserts that, on or after 10 April 2018, Budget's Notice of Suspension first came to the attention of its "director": Reply at [10](iii), (vi)-(xi). 6. On 19 April 2018, Budget terminated the sub-contract, following what it asserts was Grandview's repudiation of the sub-contract by preventing Budget from continuing work in January 2018, failing to pay what it owed Budget, purporting to serve the Notice to Show cause and purporting to terminate the sub-contract on 9 April 2018: ASC at [17A]; Defence to ASC at [17A]. Events since termination of the sub-contract 1. On 2 November 2018, Parker J gave judgment in the statutory demand proceedings: Grandview Ausbuilder Pty Limited v Budget Demolitions Pty Limited [2018] NSWSC 1647 (statutory demand judgment). His Honour concluded that Grandview had an offsetting claim for $220,000, being liquidated damages for delay for the period from 13 December 2018 to 31 January 2019, but that no liquidated damages for delay could be recovered after 31 January when Budget (in accordance with its statutory rights) suspended work and because Grandview had not established that its other claims, for liquidated milestone damages and costs to complete works (also referred to as loss of bargain damages), were offsetting claims for the purposes of the statutory demand: at [24], [25] and [29] and [54]. 2. Grandview appealed Parker J's judgment in so far as His Honour rejected that Grandview had offsetting claims based on its milestone damages and loss of bargain damages claims. 3. On 21 February 2019, prior to the Court of Appeal handing down judgment, Grandview commenced these proceedings for a reconciliation of the sub-contract price, liquidated damages, milestone damages and the cost to complete the sub-contract works (loss of bargain damages) in an amount of $1,880,693.26. 4. On 29 March 2019, the Court of Appeal dismissed Grandview's appeal in the statutory demand proceedings: Grandview Ausbuilder Pty Limited v Budget Demolitions Pty Limited (2019) 99 NSWLR 397; [2019] NSWCA 60 (statutory demand appeal judgment). Relevantly, the Court of Appeal concluded that Grandview had no offsetting claim for loss of bargain damages as Grandview had, by its email of 20 December 2017, affirmed the sub-contract and elected to continue performance notwithstanding the breach for non-completion of the works by 12 December 2017. It also found that Budget's Notice of Suspension remained in effect when Grandview purported to terminate on 9 April 2018: per Bell P at [66] - [69], White JA and Sackville AJA agreeing. The Court of Appeal rejected Grandview's claim that its loss of bargain damages claim was an offsetting claim by reason of the operation of cl 37(h) and cl 39 of the sub-contract: per Bell P at [70] - [74] with White JA and Sackville AJA agreeing. 5. On 27 June 2019, Budget commenced proceedings in this Court seeking to wind up Grandview (winding up proceedings). 6. On 6 August 2019, Qingde Zhang replaced Jason Zhang as the sole director and secretary of Grandview. Jason Zhang remained the sole shareholder of Grandview. 7. On 12 August 2019, Mr Bailey was appointed Grandview's administrator on the grounds of insolvency or likely insolvency. 8. On 23 August 2019, Grandview filed an application in the winding up proceedings for an adjournment of the hearing. 9. On 19 September 2019, Rees J adjourned the hearing in the winding up proceedings pursuant to s 440A(2) of the Corporations Act: In the matter of Grandview Ausbuilder Pty Limited (administrator appointed) [2019] NSWSC 1243. Her Honour was satisfied that it was in the interests of Grandview's creditors to grant the adjournment to enable the creditors to decide whether to accept the DOCA proposed by Mr Bailey: at [100]. Rees J observed that Budget had submitted a proof of debt to Mr Bailey for $846,169.58 comprising the Dec payment claim, estimated interest and legal costs; that Mr Bailey made a "just estimate" of Budget's proof of debt (revising it down to $424,452); and that, in the report to creditors, Mr Bailey noted that the amount of Budget's Dec payment claim was not in dispute but he had been unable to ascertain whether Budget was entitled to claim interest as there was no judgment debt nor any provision in the sub-contract for the payment of interest: at [69]. 10. On 30 September 2019, the proposed DOCA was approved by the creditors of Grandview. On that day, Rees J adjourned the winding up proceedings to 20 December 2019. 11. On 8 October 2019, Senior Deputy Registrar Hedge made orders by consent in these proceedings as follows: a. Leave be granted to the Plaintiff to file the Amended Statement of Claim by 11 October 2019; b. The Defendant file its amended defence and Cross claim on or before 22 October 2019; c. The Plaintiff file any defence to the Cross claim and reply to the defence on or 5 November 2019. 1. On 22 October 2019, Grandview filed the ASC, the subject of Budget's strike out and dismissal motion. 2. On 25 October 2019, Budget filed its defence to the ASC and its cross-claim. 3. On 20 December 2019, Rees J dismissed the winding up proceedings: In the matter of Grandview Ausbuilder Pty Limited (subject to deed of company arrangement) (Supreme Court (NSW), Rees J, 20 December 2019, unrep). 4. On 23 March 2020, Grandview filed its defence to Budget's cross-claim. 5. On 25 March 2020, Parker J ordered Grandview to provide interim security for Budget's costs in these proceedings in the sum of $21,000 within 21 days by payment into Court or such other form as agreed with the Registrar or between the parties: security for costs judgment at [52]-[53]. His Honour "questioned whether [Grandview's] claims could be maintained, or at least maintained for the amounts sought in the [ASC]" because there was "some overlap between the claims pleaded in the [ASC] and the cross-demand claims which were considered in the statutory demand proceeding." His Honour observed that the Court of Appeal expressed the view, in strong terms, that any claim by Grandview for loss of bargain damages was manifestly untenable and noted "that Grandview could not maintain a claim for liquidated damages, to the extent that the claim covered the period after Budget, as it was entitled to do, suspended work under the SoP Act and [that] aspect of his decision was not questioned in the Court of Appeal": at [39], [42] and [43]. His Honour was also of the view that, if the proceedings went on at all "Grandview will have to limit its claim and reconsider the balance from the ground up, or at least seriously consider doing so. If that happens Budget will have to reframe its defence": at [47]. 6. On 29 April 2020, Grandview's solicitor in these proceedings sent an email to Budget's solicitor advising that Grandview was putting up security for costs "shortly". The email goes on to state: In relation to the proceedings, I also have confirmed instructions (approved by the Deed Administrator) not to press those parts of the [ASC] in which my client [Grandview] claimed damages, referred to by His Honour Parker J as "the loss of bargain" damages". A formal letter which outlines each paragraph of the [ASC] will not be pressed will be provided to you shortly and once the security is deposited with the Court. There will accordingly be no need for your client to file any motion to strike out that part of the claim as was envisaged before His Honour. 1. On 30 April 2020, Budget filed its notice of motion seeking to dismiss or strike out Grandview's claims and for judgment on its cross-claim. At that time, Grandview had not provided security for costs in accordance with Parker J's orders. 2. On 5 May 2020, Grandview provided to the Court a bank guarantee in the sum of $21,000 to be held as security for Budget's costs. 3. On 8 May 2020, Grandview's solicitor notified Budget's solicitor that Grandview had provided security by way of bank guarantee and that its offer not to press the loss of bargain damages claim was adopted solely to avoid the cost of a strike out motion and further delays. The position regarding the offer to not press the loss of bargain damages claim was reiterated in a further letter from Grandview's solicitor dated 12 May 2020. 4. On 25 May 2020, Grandview filed its notice of motion seeking to have these proceedings transferred to the Technology and Construction List of this Court. 5. On 23 June 2020, Grandview filed its reply to Budget's defence to the ASC. Budget's application to strike out or dismiss Grandview's claims 1. Budget relies on rr 14.28(1) and 13.4 of the UCPR for orders that Grandview's ASC be struck out and for Grandview's claims for relief to be dismissed. 2. Rule 14.28(1) provides that the Court may order that the whole or any part of a pleading be struck out if the pleading: (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or (c) is otherwise an abuse of the process of the court. 1. Rule 13.4(1) gives the Court the power to summarily dismiss proceedings or any claim for relief if: (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court. 1. Rules 14.28(2) and 13.4(2) provide that the Court may receive evidence on the hearing of an application under each of those rules. 2. The principles to be applied when considering an application to summarily dismiss claims on the basis that no reasonable cause of action is disclosed were summarised by Gleeson JA (Beazley P and Barrett JA agreeing) in Simmons v NSW Trustee and Guardian [2014] NSWCA 405 at [196] to [200]: [196] It is not in dispute that "great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of [their] opportunity for the trial of [their] cause by the appointed tribunal": General Steel Industries Inc v Commissioner for Railways (NSW) (General Steel) [1964] HCA 69; 112 CLR 125 at 130 (Barwick CJ). [197] More recently in Agar v Hyde [2000] HCA 41; 201 CLR 552, Gaudron, McHugh, Gummow and Hayne JJ said at [57]: "Ordinarily, a party is not to be denied the opportunity to place [their] case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way." [198] Subsequent authorities have reaffirmed that formulation: see Batistatos v Roads and Traffic Authority (NSW) [2006] HCA 27; 226 CLR 256 at [46]; Spencer v Commonwealth at [24]. [199] In Shaw v New South Wales [2012] NSWCA 102, Barrett JA (with whom Beazley, McColl, Macfarlan JJA, and McClellan CJ at CL agreed) expressed the test for summary dismissal as follows at [32]: "The question is...whether the claims in question are so obviously untenable or groundless that there is 'a high degree of certainty' that they will fail if allowed to go to trial; and whether this is one of the 'clearest of cases' in which the court may accordingly intervene to prevent the claims being litigated." [200] Further, that assessment is to be made taking the plaintiff's case at its highest. The party applying for summary dismissal must accept the truth of all allegations in the statement of claim, and the ranges of meaning which the assertions of fact in the statement of claim are capable of bearing: Penthouse Publications Ltd v McWilliam (Court of Appeal (NSW), Priestley and Meagher JJA and Wardell AJA, 15 March 1991, unrep); Agius v New South Wales [2001] NSWCA 371 at [24]. 1. Whether a party has a real or more than a fanciful prospect of success may involve a judgment of mixed law or fact. Where there are factual issues capable of being in dispute, dismissal on a summary basis should not be awarded simply because a Court has formed a view that the applicant is unlikely to succeed on a factual issue. Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28 (Spencer v Commonwealth) at [25]. 2. There is also a distinction between a deficiency which provides for a strikeout of pleadings, as opposed to evidence that may disclose that a person has or may have a reasonable cause of action or reasonable prospects of success: O'Brien v Bank of Western Australia [2013] NSWCA 71 at [68]; White Industries Australia Limited v Federal Commissioner of Taxation (2007) 160 FCR 298; [2007] FCA 511 at 309 cited in Spencer v Commonwealth with apparent approval at [23]. 3. For a pleading to be embarrassing and struck out, it must be unintelligible, ambiguous, vague or too general so as to embarrass the opposite party who does not know what is alleged against them: McGuirk v University of New South Wales [2009] NSWSC 1424 at [30] to [31]. 4. An embarrassing pleading is one that is susceptible to various meanings or contains inconsistent allegations or in which alternatives are confusingly intermixed: Shelton v National Roads and Motorists Association Limited [2004] FCA 1393 at 18 (Tamberlin J). 5. Budget's submissions as to striking out and dismissing Grandview's claims are put on the basis that the claims advanced in Grandview's ASC do not disclose a reasonable cause of action or are embarrassing. Budget relies, in particular, on observations made by Parker J and the Court of Appeal about Grandview's claims in the statutory demand proceedings and security for costs judgment. 6. Grandview contests Budget's strike out and dismissal application. It says, among other things, that the observations of Parker J and the Court of Appeal are not relevant or binding, particularly as the statutory demand proceedings involved an interim debt and whether Grandview had an offsetting claim, and were made prior to Grandview filing its reply to Budget's defence to the ASC. 7. I deal with each of Grandview's claims in turn. Liquidated damages for delay – ASC: paragraphs 9 to 17C and prayers 5 and 6 1. Grandview claims liquidated damages for delay as a debt due in the sum of $519,200 (including GST), or alternatively $563,200 (including GST), for Budget's failure to reach practical completion calculated from 12 December 2017 to termination: ASC, prayer 5. 2. The claim is based on Grandview's pleading that, in breach of the sub-contract, Budget failed to perform works between 5 September and 12 December 2017 and reach practical completion by 12 December 2017, Grandview served on Budget a show cause notice in response to which Budget removed its equipment from the Site thereby repudiating the sub-contract, and Grandview terminated the sub-contract on 9 April 2017, which termination was accepted by Budget, or Budget terminated the sub-contract by notice dated 19 April 2018: ASC at [9] – [16] and [17A]. 3. Grandview calculates liquidated damages at $4,000 per day from 12 December 2017 until termination of the sub-contract by Grandview on 9 April 2018 as $519,200 or, alternatively, to the date on which Budget terminated as $563,200: ASC at [17] and [17B]. 4. It also seeks, in the alternative, an order that Budget pay liquidated damages to Grandview in a sum to be assessed (prayer 6) and that it is entitled, pursuant to cls 30(b) and 37(h) of the sub-contract, to set off liquidated damages due to it by Budget against any payment claim or money due to Budget: ASC at [17C]. 5. Budget submits that Grandview's claims for liquidated damages for delay should be struck-out as disclosing no reasonable cause of action for essentially two reasons. 6. First, Budget submits that Grandview's action of closing the Site on an indefinite basis from 4 January 2018 prevented Budget from completing the sub-contract works, thereby disentitling Grandview to liquidated damages from that date to the date of termination of the sub-contract. In support of this submission, Budget relies on the prevention principle, as enunciated by the Court of Appeal in Probuild Constructions (Aust) Pty Limited v DDI Group Pty Limited (2017) 95 NSWLR 82; [2017] NSWCA 151 at [114], [115] and [116], and Parker J's observation in the statutory demand proceedings that Grandview's liquidated damages claims for delay are seriously contestable after 4 January 2018: at [23]. 7. Second, Budget contends that, in so far as Grandview's claim relates to the period from 31 January 2018, it is untenable because Budget lawfully suspended work and obtained statutory protection from liability for any delay damages from that date: s 27(3) of the SoP Act. Budget relies on the observations in the statutory demand proceedings of Parker J that Grandview's liquidated damages claim for delay is not viable by the end of January because of the Notice of Suspension (at [24]) and Bell P's observations in the statutory demand appeal judgment that the works were suspended by Budget: at [68]. 8. It is implicit in Budget's submissions that it accepts that Grandview has an arguable cause of action for liquidated damages for delay from 12 December 2017 to 4 January 2018 and its application to strike out and dismiss Grandview's claim relates to the period from either 4 January or 31 January 2018. Indeed, at the hearing, Budget's counsel submitted that Grandview's delay damages claim was worth around $88,000, based on an end date of 4 January 2018, which placed the case in the Local Court, or in the District Court if delay damages ran to 31 January 2018, which he contended was the "high watermark" of Grandview's claim. 9. At the hearing, Budget's counsel also accepted that Grandview's claim for liquidated damages post-31 January depends, in large part, on the validity and effectiveness of Budget's Notice of Suspension. 10. Grandview submits that its claim for liquidated damages from 4 January 2018 raises triable issues of fact and law and matters for evidence as to whether Budget's validly suspended works and whether Budget was prevented from completing the sub-contract works from that date. Grandview submits that its Reply puts Budget's suspension of works into issue as it denies that Budget's suspension was valid under s 27 of the SoP Act on the basis that the Notice of Suspension was not, and has never been, effectively served on Grandview and is therefore invalid and of no legal effect, including by reason of Grandview having terminated the contract prior to service of the Notice of Suspension: Reply at [9] and [10]. I accept that submission. 11. The triable issues of law and fact raised by Grandview's Reply include whether Budget served the Notice of Suspension in accordance with the notice provisions of the sub-contract, s 31(1) of the SoP Act or in accordance with s 109X(1) of the Corporations Act. 12. Budget submits that the Notice of Suspension was validly served on Grandview because Mr Habib's 31 January 2018 email attaching the Notice of Suspension was sent to Mr Zhang's email address and Mr Zhang was, at the time, Grandview's sole director and the person who signed the sub-contract as Grandview's authorised representative. Budget also submits that the Notice of Suspension was served in accordance with the notices clause in the sub-contract and s 109X(1)(b) of the Corporations Act, which provides that a document may be served on a company by delivering a copy of the document personally to a director of the company who resides in Australia. 13. It is not appropriate for me to express any final view on the matters raised on a strike out application. Suffice to say that I consider it to be reasonably arguable that the Notice of Suspension was not served in accordance with the notices clause in the sub-contract (cl 6) which provides that: A notice shall be deemed to have been given when it is received by the person to whom it is addressed or is delivered to the address of that person stated in this Subcontract or last communicated in writing by that person to the person giving the notice, whichever is the earlier… A notice may be delivered personally, by courier, by post, by facsimile or by electronic mail (e-mail). A notice is deemed to be delivered as follows: a. a notice which is hand delivered when it is delivered to the addresses for the Subcontractor and the Builder's Representative contained in Annexure A… d. a party sending the notice shall keep a contemporaneous record of any notice sent by it by electronic mail. 1. I also note that Mr Habib's 31 January 2018 email was sent to jason@grandviewco.com.au and to "May" and "Sharon" at Grandview, not to Peter Liu, the person identified in item 3 of Annexure A to the sub-contract as Grandview's representative. 2. I also consider it to be reasonably arguable that sending the Notice of Suspension to Mr Zhang by email was not service by delivering it to Grandview personally, as provided for by s 31(1)(a) of the SoP Act, or service by delivering a copy of the Notice of Suspension personally to Mr Zhang, as provided for by s 109X(1)(b) of the Corporations Act. 3. In my view, there are also triable issues of fact as to whether Mr Habib's 31 January email and attached Notice of Suspension were accessed by or brought to Mr Zhang's attention at or around the time it was emailed to him, and whether a letter dated 10 April 2018 from Budget's legal representative gave first mention of the Notice of Suspension, thereby bringing it to the attention of Mr Zhang for the first time: Reply at [9] and [10](vi). 4. It is for Budget to establish that there are no triable issues of fact regarding service of the Notice of Suspension and whether it was brought to the attention of Mr Zhang. Budget did not adduce any evidence that it usually served notices or other documents required by the sub-contract on Grandview by email sent to Mr Zhang, nor did it adduce evidence that Mr Zhang resided in Australia at the time it contends the notice of suspension was served. Other than Mr Habib's 31 January email attaching the Notice of Suspension and the emails referred to at [24] and [25] above, Budget did not adduce any evidence that dealt with the issues raised by Grandview's Reply. Leaving to one side that they were belatedly tendered by Budget at the hearing, in my view, the emails do not provide a basis for concluding that there is no triable issue that the Notice of Suspension was informally and effectively served on Mr Zhang, and thereby on Grandview. 5. As Grandview's counsel also submits, the factual and legal issues raised in Grandview's Reply challenging the validity of the Notice of Suspension were not considered by Parker J and the Court of Appeal in the statutory demand proceedings. It follows that their conclusions that Budget suspended works and Parker J's observation in the statutory demand judgment that Grandview had no viable liquidated delay damages claim after 31 January 2018 are not determinative on the issues raised on this application regarding the service and validity of Budget's Notice of Suspension and whether Grandview's ASC discloses a reasonable cause of action, as Budget's submissions suggest. 6. In my view, the issues relating to the Notice of Suspension cannot be resolved in favour of Budget on a summary basis on this application. Nor, in my view, should Grandview's claim for liquidated damages from 31 January 2018 be struck out or dismissed on the basis that Budget's works were suspended from that date. 7. The material before the Court points to the conclusion that Grandview will have difficulties in establishing a cause of action for liquidated damages for delay from 4 January 2018. The evidence on this application indicates that Budget attempted to continue with the sub-contract works on Site on 3 January 2018, was told by Grandview on 4 January to cease works, and, after service of the statutory demand, was advised by Grandview that the Site remained closed from 5 February until further notice, thereby arguably preventing Budget from accessing the Site and completing its works. 8. But, as Parker J observed in the statutory demand proceedings, Budget's contention that it cannot be liable for liquidated damages for delay due to Grandview's exclusion of Budget from the Site is potentially contestable as Budget may need to affirmatively establish that, had it not been denied access, it would have undertaken the works during the relevant period: statutory demand judgment at [24]. No evidence was led by Budget on this application that it would have done so after 4 January 2018. 9. There will also be issues of fact, that cannot be resolved on this application, as to whether Budget was asked to come back on Site to complete the works in the period from January 2018 to the date of termination and whether Grandview's show cause notice, issued on 5 March 2018 was an attempt to get Budget back to complete the works and had that effect. 10. It follows that I am not persuaded that Budget has demonstrated, by evidence on this application, that Grandview has no reasonable cause of action for liquidated damages from 4 January 2018 on the basis of the prevention principle and that its claim for relief for liquidated damages should be dismissed entirely. 11. The only basis on which Budget submits that Grandview's pleading of the liquidated damages claim is embarrassing and should be struck out pursuant to r 14.28 is that the claim is untenable beyond January 2018 (because of the suspension of works) and "nowhere has that month been identified [in the pleading] as the appropriate stopping point", such that it "does not meet the requirements for a reasonably pleaded cause of action". Given my conclusion at [88] above, that submission cannot be sustained. 12. No submission was advanced by Budget that Grandview's pleading of its liquidated damages claim is unintelligible or ambiguous. It is also clear from the submissions advanced at the hearing that Budget knows the case that is alleged against it and that the dispute is really about the quantum of Grandview's liquidated damages claim. In those circumstances, and while accepting that Grandview's liquidated damages claim is pleaded in what might be described as a general and vague way (see, for example ASC at [14], [15], [16], [17A] and [17C] and prayer 6), I am not persuaded by Budget's submissions that paragraphs 12 – 13, 16 – 17C and 25b of the ASC should be struck out or prayers 5 and 6 dismissed. Damages for failure to complete works – ASC: paragraphs 18 to 24 and prayer 7 1. Paragraphs [18] to [24] of the ASC plead Grandview's claim for damages for Budget's failure to complete the sub-contract works, a claim referred to at the hearing and in the other judgments as Grandview's loss of bargain damages claim. 2. Paragraph 21 pleads that the works remained incomplete as at the date of termination. Paragraph 22 pleads that Budget is liable to pay damages for its breach of contract and failure to complete the works pursuant to the provisions of the sub-contract, including clause 40 and at law. 3. Grandview claims damages in the sum of $925,893.26 (including GST), based on an independent quantifier assessing the cost to complete the incomplete works at $1,168,645 (including GST): at [23] to [24]. The calculation is based on an adjusted contract price: at [18] to [20]. 4. Budget submits that the fundamental problem with Grandview's claim is that the Court of Appeal concluded that Grandview is not entitled to loss of bargain damages because it affirmed the sub-contract on 20 December 2018, rather than electing to terminate for Budget's alleged failure to complete the works by 12 December 2017. 5. Budget relies, in particular, on Bell P's conclusions in the statutory demand appeal judgment (at [66] to [69]) that: 1. Grandview's asserted claim for loss of bargain damages did not meet the relatively low threshold necessary to establish an offsetting claim for the purposes of s 459H(1)(b) of the Corporations Act because the date for practical completion, namely 12 December 2017, came and passed, Budget remained working on the Site and no complaint was made by Grandview in relation to the failure to complete at that date; 2. it was clear beyond argument that Grandview had affirmed the sub-contract as at 20 December 2017 when it sent its email notifying Budget that the Site would be closed down over the Christmas and New Year period and work would resume on Monday, 5 February 2018 as Grandview's statement that the team "look forward to continue working with you throughout 2018" was an unequivocal statement wholly inconsistent with any intention to terminate the sub-contract; 3. the 20 December email evidenced that Grandview plainly elected to continue the performance of the sub-contract and affirmed it notwithstanding the breach on which it relies, namely the non-completion of the works by 12 December 2017. 1. Budget submits that Grandview's loss of bargain damages is effectively the same creature as that which the Court of Appeal said could not succeed. It argues that Grandview's loss of bargain damages claim should be struck out and the prayers for relief dismissed as those parts of the ASC are "untouched" since the statutory demand appeal judgement. Budget also points to Parker J's observation in the security for costs judgment that the Court of Appeal expressed the view, in strong terms, that any claim by Grandview for loss of bargain damages is manifestly untenable: at [43]. 2. In response, Grandview submits that the Court of Appeal's conclusion and Parker J's view that Grandview's loss of bargain damages claim is not tenable are premised on the validity of Budget's Notice of Suspension. It submits that this Court should not be persuaded by the views expressed in those other judgments as Grandview has put the validity of that Notice in issue in these proceedings. Grandview also argues that its Reply denies that it affirmed the sub-contract and that the denial is sufficient to raise a triable issue for the purposes of this application. 3. I accept that the views expressed in the statutory demand appeal judgment about Grandview's loss of bargain damages claim are, to some extent, based on Budget having suspended its works at the time Grandview purported to terminate the sub-contract: at [68]. But I do not agree that, having put the Notice of Suspension in issue in these proceedings, the Court of Appeal's analysis of the effect of the 20 December email on Grandview's right to terminate is not relevant to the issue to be decided on this application, namely whether Grandview's pleaded claim for loss of bargain damages is reasonably arguable. Nor do I accept that Grandview's Reply raises a triable issue. 4. Grandview's Reply contains a bare denial that it affirmed the sub-contract and asserts reliance on specific terms of the sub-contract. It is pleaded in the following terms, at [6]: Grandview denies that it affirmed the [sub-contract on or about 20 December 2017] insofar as it is claimed that, by allowing Budget to continue the works, Grandview, at any time, waived its rights to damages or to terminate the contract. Grandview relies on the express terms in the [sub-contract] and particularly the non waiver provisions in clauses 30b & 40a. 1. As pleaded, paragraph 6 of the Reply does not raise any triable issue of fact but raises questions of construction of the alleged "non waiver provisions" of the sub-contract. Those questions of construction are open to the Court to deal with on a summary basis: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69 at 130. 2. Clause 30(b) of the sub-contract provides that a failure by Grandview to demand payment or to deduct, withhold or set off liquidated damages for delay to completion will not amount to a waiver of or otherwise affect Grandview's rights and entitlements. The clause is clearly directed to non-waiver relating to liquidated delay damages. In my view, clause 30(b) does not operate, and therefore does not assist Grandview, as a non-waiver of a right to claim loss of bargain damages or to terminate for past breaches in circumstances where Grandview affirmed the sub-contract after breach. 3. As for clause 40(a), it provides: If a party breaches or repudiates this [sub-contract], nothing in this clause shall prejudice the right of the other party to recover damages or exercise any other right. 1. The reference to "this clause" is clause 40, which is entitled "Default" and sets out the rights of the parties to issue notices to show cause for substantial breaches and the consequences of failing to show cause which include, but are not limited to, a right to terminate the sub-contract: see [13(f)] to [13(i)] above. 2. Clause 40(a) recognises that the existence or exercise of a right in cl 40 (such as the right to issue or the issuing of a show cause notice) will not prejudice other rights which a party might have to recover damages, if the other party breaches or repudiates the sub-contract. Unlike clause 30(b), clause 40(a) says nothing about non-waiver where a party fails to or delays in exercising a right provided by clause 40. Nor, in my view, does clause 40(a) operate to preserve a right for a party to terminate and seek damages for past breaches where that party has acted in a manner which is entirely inconsistent with the maintenance of those rights, in this case by affirming the sub-contract and electing to continue with performance. 3. To the extent that Grandview's Reply relies on other matters in support of its denial, such as other "express terms" of the sub-contract, paragraph 6 is liable to be struck out as embarrassing as it fails to identify those other matters or terms and it is therefore ambiguous and vague. 4. Grandview's loss of bargain damages claim, as pleaded, is based on Budget being liable to pay damages for the cost to complete the works for its "breach of contract and failure to complete the works" and Grandview having terminated the sub-contract after issuing a show cause notice pursuant to clause 40 on 5 March 2018: ASC at [14], [16], [21]-[24]. Relevantly, the breach of contract and failure to complete the works are those pleaded as Budget's failure to perform the works between 5 September 2017 and 12 December 2017 and its failure to reach practical completion by 12 December 2017: ASC at [9] and [12]. Those breaches occurred before Grandview's email of 20 December 2017 and prior to the purported suspension of works by Budget. 5. I agree with Bell P's conclusion that Grandview's 20 December 2017 email operated to affirm the sub-contract. In my view, the email evinces a clear election on the part of Grandview to continue with the performance of the sub-contract and to affirm it, which is inconsistent with the later exercise of a right to terminate based on Budget's failure to complete the works by 12 December 2017. Relevantly, Grandview does not plead, and did not adduce any evidence on this application, that it communicated to Budget a reservation of rights to rely on the pleaded breaches and subsequently terminate the sub-contract, at around the time it sent the 20 December 2017 email. 6. In my view, having affirmed the sub-contract on 20 December 2018, it is not now reasonably arguable that, based on Budget's failure to complete the works on 12 December 2017, Grandview was entitled to issue a show cause notice on 5 March 2018, terminate the sub-contract on 9 April 2018 and claim loss of bargain damages: Wendt v Bruce (1931) 45 CLR 245; [1931] HCA 9 at 257: see also JW Carter, Contract Law in Australia (7th ed, 2018, LexisNexis Butterworths) at [31-05]. 7. At the hearing, Grandview's counsel submitted that Grandview has an arguable claim for loss of bargain damages as Grandview asked Budget to come back and complete the works, Budget refused to do so and then removed its equipment, and Budget's conduct amounted to a repudiation of the sub-contract and gave rise to a right for Grandview to terminate the sub-contract (T25:40-50). The difficulty with that submission is that Grandview's claim for loss of bargain damages is pleaded as arising, not from Budget being asked to come back on Site after 4 January 2018 and its alleged repudiatory conduct in March 2018, but from Budget's breach of contract and failure to complete the works, namely the pleaded breaches of failure to complete works by 12 December 2017, which are also the basis on which Grandview served its notice to show cause: ASC at [9], [12], [14], [22]. 8. If Grandview wishes to advance a claim for loss of bargain damages on a different basis, along the lines referred to by its counsel at the hearing, then that claim must be properly pleaded. Rather than doing so, the ASC and Reply assert, in a conclusory way, that Budget repudiated the sub-contract: ASC at [15]; Reply at [8]. In my view, the ASC and Reply do not plead the material facts necessary to sustain a claim for loss of bargain damages based on Grandview's termination of the sub-contract for reasons other than Budget's breach of contract and failure to complete the works by 12 December 2017, such as Budget's failure in 2018 to come back on Site and complete the works and/or its Budget's alleged repudiatory conduct. 9. In my view, Grandview's claim for loss of bargain damages, as currently pleaded in the ASC at paragraphs 21 to 24 and 25(c)(i), discloses no reasonable cause of action and is otherwise liable to be struck out as embarrassing. 10. Finally, I note that Grandview has, during the course of these proceedings, offered not to press "the loss of bargain" damages claim: at [48] and [51] above. While not determinative, such an offer seems to me to implicitly recognise that there was no reasonable prospect of prosecuting the claim as currently pleaded. Overcharging/restitution – ASC: paragraphs 24A to 24G and prayers 8 and 9 1. The ASC pleads that Budget has overcharged Grandview by its progress claims under the SoP Act in the sum of $925,893.26 and seeks a declaration to that effect: ASC at [24C]; prayer 8. 2. The overcharge claim is pleaded as arising from: 1. Grandview having paid $1,694,321.89 against Budget's interim progress claims totalling $2,220,367.15 issued pursuant to the SoP Act in respect of the sub-contract work for which the adjusted sub-contract price on completion is $2,463,119.39: ASC at [24A]; 2. as at the date of termination, the sub-contract works to a value of $1,168,645.50 [1] remaining incomplete: ASC at [24B]; and 3. the amount of the overcharge, $925,893.26, being the value of the sub-contract works remaining incomplete ($1,168,645.50) less the unclaimed balance of the sub-contract works ($242,752.24): ASC at [24F]. 1. Grandview also claims restitution for overpayments, which Grandview calculates to presently be an amount of $399,848.00, based on the total overcharging amount of $925,893.26, less set-off of the unpaid Dec payment claim of $526,045.26: ASC [24D], [24E] and [24F]. Grandview seeks an order for payment of $399,848.00 and also claims restitution for any additional sums it has to pay to Budget pursuant to the Dec payment claim pending a determination of these proceedings: ASC at [24G], [25(c)(ii)] and prayer 9. 2. Budget submits that Grandview's overcharging and restitution claim should be struck out because the claim is based on the faulty premise that overcharging can be measured by what it might cost Grandview, using a third party, to complete the incomplete sub-contract works. It also submits that, by adopting a cost to complete calculation, Grandview has tied its claim for overcharging and restitution to its loss of bargain damages claim, rather than assessing Budget's progress claims and identifying what should, and should not, have been charged for the work the subject of the claim. In my view, there is merit in that submission. 3. Budget also argues that Grandview cannot sustain the overcharging and restitution claim in the context where Grandview received, assessed, responded and made payments on all of Budget's progress claims except for the Dec progress claim. In other words, having accepted the progress claims, Budget contends that it is no longer open to Grandview to assert that it was overcharged. Related to this submission, Budget relies on exchanges between Grandview's counsel and the Court of Appeal at the hearing of the statutory demand appeal proceedings, submitting that Grandview retreated from any suggestion that Budget had overcharged. Budget also relies on Bell P's observation that a claim of overcharging was conceptually difficult anyway. I am not persuaded by this submission. 4. On my reading of the Court of Appeal transcript (at CB320-373), Grandview's counsel accepted that its offsetting claims raised in response to a statutory demand had nothing to do with overcharging, but maintained that overcharging was a concern under the sub-contract. She also accepted that the case had proceeded on the basis that there was a statutory debt due and payable, but did not concede that those amounts could not be subject to challenge: CB334 at T334:15-19 and T334:44-46. 5. Bell P's comments about the conceptual difficulty with an overcharging claim were also made in the context where amounts had not been paid. His Honour accepted that a party, such as Grandview, may be compelled to make payments under the SoP Act and challenge them later, thereby giving rise to some claim for repayment by way of restitution: CB335-6 at T335:45-50 and T336:1-4. 6. Irrespective of the exchange before the Court of Appeal, I do not accept Budget's submission that Grandview's payments or its payment schedules means there are insurmountable difficulties to the idea that Grandview was overcharged, such that a claim by Grandview that it had been overcharged by Budget and is entitled to restitution is bound to fail or is not reasonably arguable. The sub-contract provides that payment of monies pursuant to a progress claim shall not be evidence of the value of the work carried out or an admission of liability but shall be payment on account only: cl 37(d). The SoP Act also preserves Grandview's rights under the sub-contract, recognising the nature of payments made under that Act as interim and subject to challenge pursuant to the terms of the sub-contract: Sop Act, s 32; see also Falgat Constructions Pty Ltd v Equity Australia Corp Pty Ltd (2005) 62 NSWLR 385; [2005] NSWCA 49 at [20] to [22]. 7. That said, in my view, Grandview's claim for overcharging and restitution as currently pleaded in the ASC is embarrassing and should be struck out. 8. As Parker J noted in the security for costs judgment, the fundamental issue with Grandview's restitution claim is whether the amounts payable under the SoP Act for the period up to December 2018 exceeded the amounts that Budget was contractually entitled to receive by way of progress payments for that period: at [48]. That issue is not addressed in the ASC as it fails to identify the works, and their value, claimed to be overcharged compared to the works, and their value, for which Budget was entitled to be paid under the sub-contract, other than by reference to a calculation of the cost to complete the works. 9. I do not accept, as Grandview's counsel submitted at the hearing, that it is simply a matter of "reverse engineering", matters for expert evidence as to how the figures "are cut" or that the calculation of the cost to complete the works should be a sufficient proxy to enable the claim to proceed. Grandview commenced these proceedings in February 2019. If, as Grandview's counsel asserted at the hearing, Budget grossly overcharged by front loading payment claims and Grandview is now entitled to restitution for overpayment, it is incumbent on Grandview to properly plead those claims by reference to the various payment claims, the particular works and amounts in issue. It has not done so. 10. In my view, the operative parts of the overcharging/restitution pleading, namely paragraphs 24B to 24G and 25(c)(ii), should be struck out although I accept that the pleading might be able to be salvaged by amendment. Set off – ASC: paragraphs 26A to 31 and prayers 10 and 11 1. Paragraphs 26A to 31 of the ASC assert an entitlement by Grandview to set-off the debt due to Budget of $525,045.26 in relation to the Dec payment claim (the SoPA debt) against what are asserted to be the debts due by Budget to Grandview and damages claimed against Budget, as set out in the ASC: ASC at [29] and [31]. Grandview claims to be entitled to set-off money owed to it from the SoPA debt pursuant to clauses 30, 37 and 39 of the sub-contract: ASC at [30]. 2. Budget submits that the pleading acknowledges that Grandview owes the SoPA debt and goes no further than saying that Grandview can contractually set-off money owed to it from any money payable by Grandview. Budget also submits that the set-off claim is, in essence, the same claim as that rejected by the Court of Appeal: statutory demand appeal judgment at [70] to [74]. On that basis, it submits that the pleaded claims should be struck out as untenable and prayers 10 and 11 summarily dismissed. 3. In the statutory demand appeal judgment, Bell P, with White JA and Sackville AJA agreeing, concluded that Grandview's asserted loss of bargain damages claim was not an off-setting claim by reason of the operation of clauses 37(h) and cl 39 of the sub-contract. His Honour concluded that clause 37(h) was directed to deductions which Grandview may make in the course of a scheduling exercise for the making and assessment of progress claims and the issuance of payment schedules, but did not provide for offsetting claims arising many months thereafter: at [73]. 4. In my view, His Honour's conclusions regarding the operation of clause 37(h) apply to the set-off claim now sought to be advanced by Grandview in the ASC. The clause does not operate as an off-setting claim some years after the Dec payment claim was issued. The reference to clause 37(h) in the ASC should be struck out. 5. Bell P also found that clause 39 was not and could not be engaged by the claimed loss of bargain damages because clause 39 only applied to deductions from monies "due from the sub-contractor to the builder", as opposed to money simply claimed to be due: statutory demand appeal judgment at [71]. Relevantly, that finding was made in the context where His Honour had to be satisfied that Grandview had a presently existing offsetting claim as a credible or plausible answer to Budget's statutory demand: at [74]. In contrast, Grandview now advances a claim to set-off the yet unpaid SoPA debt against any amounts found to be payable by way of damages in these proceedings. In my view, it is reasonably arguable that clause 39 might be engaged if Grandview succeeds with the claims it advances in these proceedings and is, therefore, not liable to be struck out. 6. The Court of Appeal did not consider clause 30 of the sub-contract. At the hearing, I raised this with Budget's counsel. He indicated he would address me on it "later", which I took to mean later on at the hearing – he did not do so. 7. Clause 30(b) provides that Grandview is entitled, in its discretion, to deduct payment of the liquidated damages amount from any amount otherwise payable to Budget. In the absence of any substantive submissions from Budget in relation to clause 30, I am not satisfied that Budget has shown that Grandview's pleading, in so far as it relies on clause 30, discloses no reasonable cause of action and ought be struck out entirely, although it seems clear that it could only operate as a right of set-off against payment of liquidated damages for delay to completion. 8. For these reasons, I do not consider that paragraphs 26A to 31 should be struck out as untenable or that prayers 10 and 11 should be summarily dismissed. The pleadings should be amended to reflect that there is no available claim for set-off under cl 37 of the sub-contract and that any set-off under cl 30 relates to liquidated damages only. Should leave to re-plead be granted? 1. Grandview submits that, if any alleged pleading defect can be cured by amendment, the Court should grant leave to amend rather than exercise the power to strike out. 2. Budget submits that Grandview should not be granted an opportunity to re-plead in circumstances where it was put on notice by Parker J that "the claim may well require reconsideration from the ground up before it should be allowed to proceed at all" and that Grandview would have to "limit its claim": security for costs judgment at [39] and [47]. 3. While there is some force to Budget's submission, I am not persuaded that orders should be made at this stage that shut Grandview out from seeking to properly articulate its claims, particularly as some of the issues I have identified might be able to be cured. In my view, the proper course is to strike out the paragraphs I have identified and provide Grandview with an opportunity to serve a further proposed ASC and make an application for leave to amend within a short timeframe. The application should be made on the basis of the best pleading that Grandview says that it can advance having had an opportunity to consider these reasons. If Budget maintains that the newly articulated claims disclose no reasonable cause of action or there are other pleading deficiencies, it can contest Grandview's application for leave to amend. If Budget succeeds, then the proceedings may need to be transferred to the District Court. 4. I will make directions for Grandview to serve any further proposed ASC and to make its application for leave to amend. Given the history of this matter, the timetable is a tight one and the opportunity provided to Grandview to re-plead should be the last one afforded to it. In my view, it would be contrary to the objectives of ss 56 to 58 of the Civil Procedure Act 2005 (NSW) (CPA) to allow Grandview additional opportunities to do so. Grandview's motion to transfer the proceedings to the technology and construction list 1. Grandview's motion seeks to have the proceedings transferred to the technology and construction list pursuant to rr 45.2 and 45.7 of the UCPR. Grandview submits that the proceedings should be transferred to that list as the proceedings relate to disputes arising under a construction contract within the meaning of r 45.7 and raise issues concerning the operation of the SoP Act. 2. Given the subject matter of the proceedings, I accept there would be merit in transferring them to the technology and construction list. However, I do not consider it appropriate to exercise my discretion to do so until the issues relating to Grandview's claims and any application for leave to amend have been finally resolved and it is known whether the proceedings will remain in this Court or be transferred to the District Court. 3. Accordingly, I decline to grant the orders sought by Grandview at this stage and will adjourn Grandview's motion to 15 October 2020, when the proceedings are next listed before the Equity Registrar. Budget's applications in relation to its cross-claim 1. At the hearing, the main debate was whether the Court should enter judgment for Budget on its cross-claim under s 15 of the SoP Act. 2. Budget submitted that judgment should be entered on the basis that the Dec payment claim for $526,045.26 was not answered by a payment schedule within the time required by s 14(4)(b) of the SoP Act; the Dec payment claim was not paid by the due date and remains outstanding; and Budget has commenced proceedings seeking to recover the unpaid amount of the Dec payment claim as a debt due: SoP Act, ss 15(2)(a)(i), 15(4)(a). 3. Grandview's counsel accepted that it was open to the Court to grant judgment under s 15(2)(a)(i) of the SoP Act but contended that there is no utility in doing so as Grandview is in administration and operating under a DOCA. She also submitted that entering judgment would give rise to inconsistent judgments, having regard to the issues raised by Grandview's ASC and its defence to the cross-claim, noting that Budget's cross-claim also seeks payment from Grandview on a final basis pursuant to clause 37(c) of the sub-contract. 4. At the end of the hearing, I reserved judgment and gave leave to Grandview's counsel to send to my chambers any authority she wished to rely on in relation to her contention that the Court should refuse to give judgment on Budget's cross-claim under s 15 of the SoP Act in circumstances where there are s 32 proceedings on foot. 5. The next day, Grandview's counsel sent an email to my Associate referring to two authorities. The email also attached a copy of the DOCA, which had not been in evidence at the hearing. In the email, Grandview's counsel submitted that the issue raised at the hearing about inconsistent judgments need not be determined as the terms of the DOCA, to which Budget was bound, prevented it from commencing proceedings for the debt claimed. The email also drew my attention to s 444D(1) of the Corporations Act, which provides that a DOCA binds all creditors of the company, so far as it concerns claims arising on or before the day specified in the DOCA. 6. In response, Budget's counsel sent an email objecting to Grandview's counsel sending anything to chambers other than the two authorities. 7. In view of these matters, the parties were directed to appear before me at a short hearing that afternoon. 8. At the resumed hearing on 7 August 2020, Budget objected to Grandview being given leave to re-open to rely on the DOCA. I indicated that I was inclined to allow the DOCA to be tendered but would provide the parties with an opportunity to serve supplementary written submissions and that I would deal with Grandview's application for leave to re-open and the matters raised by it in these reasons. The parties have provided written submissions in accordance with the timetable as well as further affidavit evidence. 9. In summary, Grandview seeks leave to re-open to tender the DOCA and Mr Bailey's affidavit. It also now contends that Budget's motion seeking judgment pursuant to the SoP Act and its cross-claim should be dismissed as incompetent because no leave was obtained from Mr Bailey or the Court, pursuant to by s 440D(1) of the Corporations Act, and because of the terms of the DOCA. 10. Budget objects Mr Bailey's affidavit. It contends that the DOCA is structured to allow for the cross-claim and that it was instituted with the consent of Grandview. Budget submits that it would not appear to need leave under the Corporations Act to continue with the cross-claim but, if it does and the DOCA affects its right to proceed, the Court should grant leave under s 444E(3) of the Corporations Act and enter judgment in its favour. The DOCA 1. The DOCA is executed by Mr Bailey and is dated 30 September 2019. The relevant terms are summarised below. 2. Mr Bailey ceased to be Grandview's administrator and was appointed as the DOCA administrator from 30 September 2019: cl 4.2. 3. From 30 September 2019, the control and stewardship of Grandview reverted to Qingde Zhang (director) and Mr Bailey had no part in its management or operation: cl 11.1. 4. Mr Bailey has the powers set out in the Corporations Act as well as the power to be the final arbiter of any offer of settlement received or negotiated in the Proceedings: cl 4.6. Proceedings are defined in cl 1.1 to mean the proceedings between Grandview as plaintiff and Budget as defendant (a creditor of Grandview) and otherwise on the basis of causes of action claiming a total sum of $1,449,266.66 less a set off of $526,046.26 on account of liquidated damages, overcharging and restitution pursuant to the SoP Act as pleaded in a proposed amended statement of claim to be filed in the proceedings, and any necessary appeal or enforcement action arising from a determination of those proceedings. I note that, the definition of Proceedings does not include or refer any cross-claim filed or pursued by Budget. 5. Grandview agrees to prosecute the claims the subject of the Proceedings. Jason Zhang is to provide at least $100,000 on account of Grandview's legal costs and disbursements for the Proceedings, such costs being in addition to the obligation to pay the Compromise Amount, which is defined as the sum of $360,000: cls 5.5, 5.6, 1.1. 6. If the Proceedings have not been determined or a settlement reached within six months after receipt of full amount of the Compromise Amount, Mr Bailey is to hold a meeting of Creditors and seek a resolution as to whether the Deed Fund should be distributed in accordance with the DOCA: cl 5.10. 7. Creditors are defined by cl 1.1 to mean any person who has a debt payable by or claim against Grandview whether present or future, certain or contingent, ascertained or sounding only in damages, the circumstances giving rise to which occurred on or before 12 August 2019. Relevantly, that definition includes Budget. 8. The DOCA provides for the establishment of a fund from different sources: cl 5.1. Creditors can make a claim on the fund in respect of admitted Claims only: cl 8.1. Mr Bailey, as deed administrator, is the arbiter of such claims: cl 8.4. If the Creditors vote early in favour of a dividend, Mr Bailey can pay them all, except Budget, whose entitlement must be paid into court: cl 9.3. 9. Creditors must accept their rights and entitlements specified in the DOCA in full satisfaction of all Claims which they have or may claim to have against Grandview, must not exercise any right of set off or cross-action to which the Creditor would not have been entitled had Grandview been wound up on 12 August 2019 and shall not demand or accept payment of any monies from Grandview in respect of debts or claims which arose prior to 12 August 2019 other than monies payable in accordance with the DOCA: cls 12.1, 12.2 and 12.5. 10. Clause 12.4 relevantly provides that: From the date of [the DOCA], no Creditor shall: (a) begin, support or continue with any action seeking an order that the Company be wound up; (b) begin taking any further steps or continue with any legal proceedings or arbitration against the Company or in relation to any property of the Company; (c) commence or continue with any enforcement process in relation to any property of the Company; (d) begin or continue with any proceedings against the Company in relation to any of its property or begin or proceed with any enforcement process in relation to property used or occupied by or in possession of the Company except with the leave of the Court and in accordance with such terms (if any) as the Court imposes, insofar as such action relates to a Claim which is otherwise admissible pursuant to the terms of this Deed. 1. Clause 12.7 provides that the DOCA may be pleaded as an absolute defence to any step, action, proceeding or application and in bar of any debt or claim which arose prior to 12 August 2019 or during the moratorium period and that a Creditor must not, before the termination of the DOCA: (a) exercise any right of set off or cross-action to which the creditor would not have been entitled had the company been wound up at the day when the administration began; or (b) commence or take any further step in any proceeding or arbitration against Grandview or to which Grandview is a party. Should Grandview be given leave to re-open to rely on the DOCA and Mr Bailey's affidavit? 1. The Court has the power to make directions and orders at any time for the conduct of proceedings, which includes making an order granting Grandview leave to re-open and rely on the DOCA and Mr Bailey's affidavit: UCPR, r 2.1. 2. In exercising that power, the Court must seek to give effect to the overriding purpose of the CPA and the UCPR to facilitate the just, quick and cheap resolution of the real issues in the proceedings, manage the proceedings having regard to the objects specified in s 57(1) of the CPA, and seek to act in accordance with the dictates of justice: CPA, ss 56(1), 56(2), 57, 58(1), 58(2). 3. The Court's discretion whether to permit a party to re-open their case must be exercised having regard to all the circumstances of the case and in a manner consistent with the public interest in a just, quick and cheap resolution of the real issues in the proceedings: The Owners – Strata Plan No 74602 v Brookfield Australia Investments Ltd [2015] NSWSC 1682 at [43]; Shaw v KPR Recruitment Australia Pty Ltd (No 2) [2017] NSWSC 707 at [15]; Urban Transport Authority of NSW v Nweiser (1992) 28 NSWLR 478. 4. Factors that are relevant to consider on an application for leave to re-open to adduce further evidence and which bear on the interests of justice, include the importance, relevance and probative value of the proposed new evidence to the issues in the case; the likely prejudice to the other party if the application is allowed, including the delay to completion of the proceedings and consequential costs; the public interest in the finality of litigation, with the consequent expectation that parties will present their evidence and submissions at one hearing; the public interest and the interest of the parties that the proceedings will be conducted efficiently and expeditiously, thereby minimising delay and expense; whether the occasion for calling the further evidence ought reasonably to have been foreseen; and any delay in making the application: Australian Securities and Investments Commission v Rich (2006) 235 ALR 587; [2006] NSWSC 826 at [18]. 5. Grandview submits that leave to re-open should be granted to enable it to tender the DOCA as it was relied on by Grandview during its submissions to the Court at the hearing of Budget's motion, its provisions are of relevance to any claims made by Budget, and because it ought to have been considered by Budget before seeking its relief for judgment on its cross-claim. 6. As to Mr Bailey's affidavit, Grandview submits that leave should be granted to enable it to respond to the submission made to the Court by Budget's counsel on 7 August 2020 to the effect that Budget had obtained the administrator's consent to Budget's cross-claim being pursued: T4:6. Mr Bailey gives evidence that he did not provide his consent to Budget filing its cross-claim or its motion seeking judgment on the Dec payment claim and that he was not aware that Budget had filed its cross-claim or was seeking judgment until shortly prior to preparing his affidavit sworn 10 August 2020. 7. Budget's written submissions do not take issue with leave being granted to Grandview to adduce the DOCA. But it objects to Mr Bailey's affidavit on the grounds that further affidavit evidence was not contemplated by the directions made on 7 August 2020, Mr Bailey is not available for cross-examination and because Mr Bailey's affidavit contains inadmissible opinion and raises issues that are difficult to respond to at this late stage. In the event that leave is granted to adduce Mr Bailey's affidavit, Budget also seeks to rely on an affidavit of Derek Ziman, Budget's solicitor, sworn 24 August 2020, in response. 8. I am satisfied that it is in the interests of justice and consistent with the just, quick and cheap resolution of the real issues in the proceedings to grant leave to reopen to Grandview to adduce the DOCA into evidence on the hearing of Budget's motion. In my view, the DOCA is important and of probative value given that Budget, as a creditor, is bound by its terms: Corporations Act, s 444D(1). The DOCA is also relevant as its terms operate to restrict Budget's ability to pursue its cross-claim and enforce any judgment debt it might obtain against Grandview: cls 12.1, 12.4, 12.5 and 12.7. 9. I am not persuaded to grant leave to Grandview to re-open and rely on Mr Bailey's affidavit. This is primarily for the reason that I do not consider his evidence to be significant or of probative value to the real issues on this application. 10. The effect of the DOCA, combined with ss 435C(1)(b) and 435C(2)(a) of the Corporations Act, is that Mr Bailey's administration of Grandview came to an end on 30 September 2019, the day the DOCA was entered into: Attard v James Legal Pty Limited [2010] NSWCA 311 at [43] and [44]. As a consequence, Mr Bailey's written consent to Budget filing the cross-claim on 25 October 2019 or its motion for judgment filed on 30 April 2020 was not required under s 440D(1) of the Corporations Act, as Grandview's submissions suggest. 11. The directions I made on 7 August 2020 did not provide for Grandview to file further affidavit evidence in chief in relation to its application for leave to re-open to rely on the DOCA. In my view, it is also inconsistent with the just, quick and cheap resolution of the real issues in the proceedings to allow evidence which cannot be tested and is subject to objection at this late stage. Has Budget been granted leave by the Court to bring the cross-claim and proceed with the motion for judgment? 1. Section 444E(3) of the Corporations Act relevantly provides that: Protection of company's property from persons bound by deed The person [bound by a deed of company arrangement] cannot: (a) begin or proceed with a proceeding against the company or in relation to any of its property except; (c) with the leave of the Court; and (d) in accordance with such terms (if any) as the Court imposes. 1. Budget submits that it "would not appear to need leave" to continue with the cross-claim. While the basis on which this submission is put is not entirely clear, it appears that Budget relies on Grandview having consented to the cross-claim being filed, the Court making "orders permitting the cross-claim" and that the "Court then granted leave for that claim": Budget's supplementary submissions at [14] and [17] . 2. If Budget seeks to contend that the consent orders made by Senior Deputy Registrar Hedge on 8 October 2019 for Budget to file its cross-claim constitutes leave as required by s 444E(3) of the Corporations Act, I reject that submission. The making of an order by consent by a Registrar to file a pleading does not constitute the grant of leave by the Court to bring proceedings against a company as required by that section. Nor could it, given the functions of a Registrar of the Supreme Court do not extend to granting leave under s 444E(3) of the Corporations Act: Supreme Court of NSW, Delegation to Registrars under section 13 of the Civil Procedure Act 2005, 17 December 2018. 3. Nor do I accept the submission that Budget does not require leave from the Court under s 444E(3) of the Corporations Act because Grandview consented to the filing of the cross-claim. 4. Budget's cross-claim was filed on 25 October 2019, after the DOCA came into effect. That claim is a proceeding within the meaning of s 444E of the Corporations Act: Josia v Horvat Constructions [2004] NSWSC 1252. Budget is a Creditor and bound by the terms of the DOCA. 5. No evidence has been put before the Court by Budget that leave has been granted. A review of the Court file indicates that no application for leave has previously been made and that Budget does not presently have leave of the Court to begin its cross-claim or proceed with its notice of motion seeking judgment on the cross-claim, as required by s 444E of the Corporations Act. 6. In my view, Budget required leave of the Court to commence the cross-claim against Grandview under s 444E of the Corporations Act and requires leave now if it wishes to proceed to judgment on its cross-claim and seek the orders in paragraph 3 of its motion. Should leave be granted under s 444E of the Corporations Act and judgment entered for Budget on the cross-claim? 1. Budget submits that, if required, the Court should grant leave under s 444E(3) of the Corporations Act and enter judgment in its favour. 2. Budget submits that this is the appropriate approach in circumstances where Grandview previously consented to the filing of the cross-claim and has filed a defence to the cross-claim, there is no dispute that the Dec payment claim gives rise to a statutory debt, and the terms of the DOCA do not operate to stop Budget from instituting its cross-claim. It also contends that Mr Bailey's treatment of Budget's basic entitlements to date inspires no confidence that, as deed administrator, he will change his approach when it comes time to assess Budget's claim under the DOCA, the terms of the DOCA could enable Mr Bailey to extinguish some or all of Budget's debt and there is, therefore, a practical benefit to determining the present value of that debt and the interest. In support of these submissions, Budget relies on Mr Ziman's affidavit. 3. In response, Grandview submits that there is currently no application before the Court for leave to be granted under s 444E of the Corporations Act and that, as leave has not been granted to date, the cross-claim and Budget's motion, in so far as it relates to the cross-claim, is incompetent: Taouk v Assure (NSW) Pty Ltd [2019] NSWCA 224 at [3] and [4]. Grandview also submits that there is no good reason to grant leave and that judgment on and orders for payment of the amount of Budget's cross-claim should not be made as they would be contrary to the express terms of the DOCA. 4. Grandview also submits that Budget's failure to obtain leave cannot be remedied retrospectively, or at all. I disagree. The Court has power to grant leave under s 444E(3) of the Corporations Act nunc pro tunc, that is, retrospectively: Re QMT Constructions Pty Ltd [2000] 1 Qd R 284; [1999] QSC 2 at [22]; Adelaide Brighton Cement Limited, in the matter of Concrete Supply Pty Ltd v Concrete Supply Pty Ltd (subject to deed of company arrangement) [2018] FCA 315 at [19]. 5. The principles applicable to the exercise of discretion to grant leave to begin or proceed with proceedings under s 444E(3) of the Corporations Act were summarised by Rees J in Re Antqip Hire Pty Limited (subject to deed of company arrangement) (in liq) [2020] NSWSC 487 at [7] where her Honour stated: Relevantly, the question is whether the claim sought to be agitated may be readily dealt with under the proof of debt procedure, or whether the company will be harassed or have its assets wasted by permitting litigation to proceed against it whilst under a DOCA. 1. In that case, her Honour granted leave because the proceedings were of a short compass and concerned foundational questions that had to be resolved by a Court to enable all parties to know whether the affairs of the companies were governed by the DOCA, a winding up, on what terms, and by whom: at [8]. 2. In determining applications for leave under s 444E(3), a similar approach is taken to that in applications for leave to proceed against a company in winding up under s 471B of the Corporations Act. The onus lies upon Budget to establish that the ordinary procedure established by the DOCA should be displaced, namely, that the continued pursuit of the litigation should be substituted for the procedure by which Budget lodges a verified proof of debt with the deed administrators who admit or reject it, wholly or in part and from whom an appeal lies to the Court. The question of whether leave should be granted turns upon the exercise of discretion. Each application must turn upon its particular facts and the questions cannot be approached as a shopping list of factors: Mehan v Arrium Limited (formerly OneSteel Ltd) [2016] NSWSC 1680 (Mehan v Arrium) at [14] (Black J). 3. Factors which have been identified in the authorities as having particular relevance include the amount and seriousness of Budget's claim; the degree of complexity of the legal and factual issues involved; the stage to which the proceedings have progressed; whether Budget would suffer disadvantage if refused leave; whether, if leave is granted, the deed administrator would be unreasonably distracted from the performance of its statutory duties or obliged unnecessarily to incur substantial legal costs; and, whether, in the circumstances, there are good reasons for allowing Budget to continue the proceedings even if the deed administrator does not provide consent; Attard v James Legal Pty Limited [2010] NSWCA 311 at [146]; Mehan v Arrium at [12]; Hill v Esplanade Wollongong Pty Ltd ACN 141 133 708 (subject to a deed of company arrangement) [2018] NSWSC 478 (Hill v Esplanade Wollongong) at [26]. 4. Applying these principles to this case, I have come to the conclusion that leave should be granted to Budget under s 444E(3) of the Corporations Act. 5. In my view, granting leave in respect of the cross-claim at this stage should not distract the deed administrator, Mr Bailey, from the performance of his duties. Nor should it harass Grandview unduly or result in Grandview's assets being wasted. Grandview is no longer under control of Mr Bailey, but under the control and stewardship of Mr Qingde Zhang. Mr Jason Zhang and Mr Qingde Zhang have agreed to indemnify Mr Bailey for his remuneration and expenses. Mr Jason Zhang is also providing the necessary funding for these proceedings and also giving instructions for Grandview. 6. The cross-claim has been on foot since 25 October 2019 and Grandview consented to it being filed. The issue raised by Budget's motion is of a narrow compass. I am also satisfied that Budget's claim to judgment under s 15 of the SoP Act on the Dec payment claim has a strong legal basis, as was recognised by Grandview's counsel at the hearing and noted by Bell P in the statutory demand appeal judgment: at [4]. 7. There may also be some disadvantages to Budget if it is unable to obtain leave and pursue the claim to judgment. Mr Bailey rejected that part of Budget's proof of debt claiming interest on the Dec payment claim because Budget did not have judgment. That issue is unlikely to be able to be resolved by the proof of debt DOCA procedure and can only be resolved by the Court. It is also a case where an appeal from the DOCA procedure is unlikely to be more convenient or involve less delay or expense that granting leave to Budget in these proceedings. 8. I accept that the moratorium, barring and other provisions in the DOCA raise a question as to whether leave should be granted. But the Courts have accepted that a DOCA has to be construed with Pt 5.3A Div 10 of the Corporations Act, which provides for the procedure of a creditor to proceed by action against a company with leave, and for claims to proceed in Court notwithstanding conflicting DOCA terms: Hill v Esplanade Wollongong at [37]; Hoath v Connect Internet Services Pty Ltd [2006] NSWSC 158 (Hoath v Connect Internet Services). As While J said in Hoath v Connect Internet Services, at [192]: If in such a case, the amount of the creditors' debt is established by judgment, the cause of action will merge in the judgment and, subject to any appeal, the deed administrator would be bound to admit the debt for the amount payable under the judgment. The deed could not bar a creditor from establishing his right to prove in this way if leave to proceed is given under s 444E(3), as that would be inconsistent with the scheme of the legislation. (Josia Pty Ltd v Horvat Construction Pty Ltd [2004] NSWSC 1252 at [6]–[8]; Easey v Grosvenor Constructions (NSW) Pty Ltd (2005) 54 ACSR 820 at 824 [16]). However, the fact that leave was given pursuant to s 444E(3) does not preclude Com-Cen from contending that the deed bars the claim, and that upon payment by the administrator to the Deed Creditors of the Creditor Entitlements all of the deed creditors' debts are extinguished, including those of Mortgage. 1. I also accept that there has been delay on the part of Budget in seeking leave and that the current application has been made to the Court by way of submissions. That said, there seems to be no prejudice caused to Grandview from that delay or the manner in which Budget's application for leave has now been made. As noted earlier, Grandview has been on notice of the cross-claim since last year and consented to it being filed. Until very recently, Grandview raised no issue with Budget's failure to obtain leave and had not pleaded the terms of the DOCA as a bar to the claim. I am also satisfied that Grandview has had an opportunity to make submissions in response to those in which Budget sought leave under s 444E(3) if required. 2. There is another factor that is relevant. These proceedings have been on foot for some time and Budget's motion for judgment was filed on 30 April 2020. Having regard to that factor and the other matters referred to above, I do not consider it would be in the interests of justice or consistent with the just, quick and cheap resolution of the real issues in these proceedings to defer consideration of Budget's application for leave, require a formal motion to be filed and have the issue brought back for further debate on another occasion. 3. As to judgment on Budget's cross-claim, I am satisfied that the evidence and the admissions in Grandview's defence to the cross-claim demonstrate that Grandview received the Dec payment claim on or about 21 December 2017, became liable to pay the Dec payment claim as a consequence of failing to provide a payment schedule within the 10 day time period, failed to pay the whole of the Dec payment claim amount and that the claimed amount remains outstanding: SOP Act, s 15(1). To the extent Grandview's defence to the cross-claim pleads matters of substance, they are matters that arise under the construction contract that Grandview is not entitled to raise in defence to judgment under the SoP Act: s 15(4)(b)(ii). 4. It follows that I will make an order for judgment in favour of Budget in the amount of $526,045.26, pursuant to s 15(2)(a)(i) of the SoP Act. Although I will grant leave to Budget in relation to the cross-claim and order judgment under the SoP Act, I am not persuaded that an order should be made for payment of all or part of the judgment sum into Court. Given the terms of the DOCA, this is a case where a condition should be imposed on the grant of leave such that Budget will not be entitled to execute judgment against Grandview's assets: Hoath v Connect Internet Services at [194]. As Rees J observed, the debt is now to be paid in accordance with the terms of the DOCA: In the matter of Grandview Ausbuilder Pty Limited (subject to deed of company arrangement) (Supreme Court (NSW), Rees J, 20 December 2019, unrep) at 2. 5. Budget also seeks an order for pre-judgment interest from 1 March 2018 pursuant to s 100 of the CPA. I am satisfied that it is appropriate to exercise my discretion and made such an order. Budget's cross-claim includes a specific claim for interest at rates in accordance with Practice Note SC Gen 16. The compensatory purpose of the discretion to award interest and the other disputes in which the parties have been involved since early 2018 are also factors which, to my mind, negate any suggestion that I should refuse to award interest based on Budget's delay in bringing the cross-claim or its motion. 6. As judgment has been granted on Budget's cross-claim under s 15(2)(a)(i) of the SoP Act, there seems to be no utility in ordering that Budget's defence to the cross-claim be struck out. Presumably, Budget will no longer proceed with the cross-claim, noting that it also seeks payment on a final basis under the terms of the sub-contract and the remaining dispute in relation to payment of the judgment sum will be determined by operation of the DOCA and the outcome of Grandview's set-off claims in these proceedings. Costs and orders 1. It is apparent from these reasons that there has been mixed success and failure on the issues before the Court. That raises the question of the appropriate cost order to be made. 2. At the hearing, the parties approached the issue of costs on the basis that different cost orders should be made in relation to the different aspects of Budget's motion. That said, other than on that part of Budget's motion relating to dismissal for failure to pay security for costs, neither party advanced detailed submissions on the issue. They also did have the opportunity to consider these reasons. 3. In my view, it would be preferable to make a cost order now in relation to Budget's motion in the hope that it will be unnecessary for the parties to incur the additional expense of making submissions on that issue in the future. I do so based on the facts known to me and some submissions made at the hearing. But as I have approached the issue in a broad brush way in some respects, I will give leave to the parties to make an application to vary the costs orders in the event they wish to contend for some different order to be made. 4. The starting point is that the award of costs is a matter within the Court's discretion: CPA, s 98. While the Court's discretion is broad, it must be exercised judicially and consistently with the overriding mandate provided for in ss 56-60 of the CPA. 5. The usual rule is that costs follow the event, unless it appears that some other order should be made as to part or all of the costs: UCPR, r 42.1. 6. Rule 42.7 relates specifically to interlocutory applications and reserved costs. The general position with respect to the costs of interlocutory applications is that they should follow the general costs of the proceedings. 7. The underlying principle is that costs should be paid in a way that is fair, having regard to what the Court considers to be the responsibility of each party for the incurring of the costs: Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [9]. 8. As to the outcomes, Budget did not have success on its application to dismiss the plaintiff's ASC, including for failure to provide security for costs. That said, in my view, it was not unreasonable for Budget to have filed the dismissal motion when it did; Grandview was, at the time, in breach of an order to provide security for costs. I do not see Budget's approach to the application after 8 May 2020, when it was advised that security had been provided by way of bank guarantee, in the same way. Budget's insistence that security had not been provided by Grandview up to the day of the hearing seems to me to have been based on an unsubstantiated concern of form over substance that could have been easily resolved if the parties' legal representatives had taken a more reasonable stance. 9. Budget has had success on its application to strike out the ASC, but only in part. There was significant debate on the issue of the Notice of Suspension and Grandview's claim for liquidated damages, on which it did not succeed. I would assess Budget's degree of success and failure as roughly equal. Two of Grandview's claims have been struck out, two have not. 10. That leaves that part of the motion relating to Budget's cross-claim. While Budget ultimately obtained judgment in its favour, in my view, Budget's conduct, prior to and at the hearing of the motion, may have led to delay and further costs given it failed to take the necessary steps to obtain leave from the Court to commence the cross-claim last year or when the motion was filed, as was required under s 444E(3) of the Corporations Act. Similarly, some criticism might also be levelled at Grandview, given it failed to include the DOCA in its evidence at the hearing and had to seek leave to re-open. I would also observe that Budget's judgment is conditional as Budget is still subject to the DOCA, and bound by its terms. 11. Having regard to all of these matters, I have come to the conclusion that the appropriate and fair costs order to make is simply to make no order as to costs with the intent that each party is to pay their own costs of Budget's motion. This is primarily for reasons relating to the various outcomes on each of the issues, the way in which issues arose and were dealt with prior to, at the hearing and subsequently, the way in which the various issues impact on each other, and the difficulty for a costs assessment if an issue by issue approach was taken to the assessment of costs. 12. I will defer entry of my cost order for 14 days. If, after considering these reasons, a party considers that some other costs order should be made, they are to confer with the other party and, by 4pm on 9 October 2020, notify my Associate that a variation to the cost order is sought and serve written submissions on that issue of no more than three pages. The other party will have a further seven days to serve responsive submissions, also of no more than three pages. The written submissions are to be sent by email to my Associate and will be determined on the papers. 13. For these reasons, I make the following orders and directions: 1. The defendant's application for summary dismissal of the plaintiff's amended statement of claim, as sought in order 1 and 2 of the defendant/cross-claimant's notice of motion filed on 30 April 2020 (defendant's motion), is dismissed. 2. Pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), paragraphs 7, 8, 9 (of the prayers for relief) and paragraphs 21 to 24, 24B to 24G, 25(c)(i) and 25(c)(ii) (of the pleadings and particulars) of the plaintiff's amended statement of claim filed on 22 October 2019 be struck out. 3. Direct the plaintiff to serve on the defendant by no later than 9 October 2020 any application for leave to amend in accordance with these reasons and a draft of a further amended statement of claim. 4. Direct the defendant to inform the plaintiff by 14 October 2020 whether the defendant consents or objects to the plaintiff filing the further amended statement of claim in the form proposed. 5. If the defendant's consent is not forthcoming, direct the plaintiff to make an application before the Registrar on 15 October 2020 for the matter to be relisted to determine whether leave should be granted for the plaintiff to file the further amended statement of claim in the form proposed. The plaintiff is to pay the defendant's costs thrown away by any amendment allowed to the amended statement of claim. 6. Pursuant to s 444E(3) of the Corporations Act 2001 (Cth), grant leave to the defendant/cross-claimant nunc pro tunc to bring and pursue its cross-claim against the plaintiff on the condition that the defendant/cross-claimant does not seek to enforce the judgment referred to in Order (7) below against the plaintiff/cross-defendant or its assets without further leave of the Court. 7. Pursuant to s 15(2)(a)(i) of the Building and Construction Industry Security of Payment Act 1999 (NSW) and r 13.1 of the UCPR, judgment for the cross-claimant against the cross-defendant in the amount of $526,045.26 (inclusive of GST) and pre-judgment interest on that sum pursuant to s 100 of the Civil Procedure Act 2005 (NSW). 8. Unless either party makes an application for a different costs order within 14 days, each party is to pay their own costs of the defendant's motion. 9. The defendant's motion is otherwise dismissed. 10. Stand over the plaintiff's notice of motion filed on 25 May 2020 for further directions before the Equity Registrar on 15 October 2020, with the intent that the motion be relisted together with any application by the plaintiff for leave to amend in accordance with Order (5). ********** Endnote 1. There appears to be an error in paragraph [24B] in the ASC, as it refers to $1,168,745, rather than $1,168,645.50: ASC [24], [24F]. Amendments 25 September 2020 - Minor typographical edits to paragraphs [193] and [195] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 September 2020