Cordukes Limited v DS Parklane Development Pty Limited [2001] NSWSC 480

New South Wales Supreme Court

CITATION : Cordukes Limited v DS Parklane Development Pty Limited [2001] NSWSC 480 CURRENT JURISDICTION: Equity Division Construction List FILE NUMBER(S) : SC 055040/99 HEARING DATE(S) : 6 and 7 June 2001 JUDGMENT DATE : 7 June 2001

PARTIES : Cordukes Limited (Plaintiff/Respondent) DS Parklane Development Pty Limited (Defendant/Applicant) JUDGMENT OF : Bergin J

COUNSEL : RW Hunt (Plaintiff/Respondent) GE Underwood (Defendant/Applicant) SOLICITORS : Corrs Chambers Westgarth (Plaintiff/Respondent) Mallesons Stephen Jaques (Defendant/Applicant) CATCHWORDS : Application for Security for Costs - Overlapping of issues in Summons and Cross Claim - Delay through period when plaintiff suffering financial difficulties - Application at time when plaintiff's financial circumstances improving. LEGISLATION CITED : Corporations Law Buckley v Bennell Design Construction Pty Ltd (1974) 1 ACLR 301 CASES CITED : KP Cable Investments Pty Ltd v Meltglow (1995) 56 FCL 189 Southern Cross Exploration v Fire and All Risk Insurance Ltd (1985) 1 NSWLR 114 Warren Mitchell Pty Ltd v Australian Maritime Officers Union (1993) 12 ACSR 1 DECISION : Application refused.

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CONSTRUCTION LIST

BERGIN J

DATE: THURSDAY 7 JUNE 2001

055040/99 - CORDUKES LIMITED v DS PARKLANE DEVELOPMENT PTY LIMITED

JUDGMENT

1 This is an application brought by the defendant DS Parklane Developments Pty Ltd, to which I shall refer as "Parklane", brought by notice of motion filed on 26 March 2001 for an order that the plaintiff Cordukes Limited, to which I shall refer as "Cordukes", provide security for Parklane's costs in defending the proceedings brought by Cordukes. 2 The proceedings arise out of a disputation in relation to a contract entered into in November 1996 between Cordukes as builder and Parklane in respect of construction of a project known as the Carlisle Apartments in Surry Hills. The contract was apparently administered by an architect, Overview Pty Ltd. 3 The proceedings commenced by way of summons filed on 17 November 1999. Parklane filed a defence and a cross-claim on 24 December 1999. The summons filed by Cordukes in November 1999 sought declarations in respect of a claim that Parklane had wrongfully repudiated the contract and that it, Cordukes, had lawfully rescinded the contract by written notice dated 16 November 1999. Cordukes made a claim that Parklane pay it for the work performed by it in respect of the works on a quantum meruit basis in the amount of $8.2 million. Alternatively, Cordukes sought an order that the defendant pay it damages for breaches of contract in the amount of some $7.6 million. 4 Further claims were made that the plaintiff, Cordukes, was properly entitled to certain extensions of time for practical completion of the works, that the works were deemed to have reached practical completion by a particular date and that Parklane should pay Cordukes an amount of $625,000 which it claimed Parklane had deducted as liquidated damages. Cordukes also sought a declaration that it was properly entitled to further payment from Parklane in the amount that I have referred to earlier. There was also an order sought in respect of the bank guarantee. 5 The cross-claim filed in December, to which I have referred a little earlier, raised two claims. One was a defective works claim and the another was a delay claim. 6 Cordukes filed an amended summons on 6 April 2000. It set out the various issues to which I have just referred but, additionally, took up the whole of the issues between the parties. Those issues were whether Parklane wrongfully repudiated the contract, whether Cordukes validly terminated the contract by reason of Parklane's alleged wrongful repudiation, whether Cordukes was entitled to the quantum meruit claim amount or, alternatively, damages, the entitlement in Cordukes to the return of the bank guarantee, issues in relation to the extension of time for practical completion, whether Parklane was entitled to deduct liquidated damages and deductions for defective works and whether Parklane was entitled to certain expenses for delay. 7 Parklane filed a further amended defence and a further amended cross-claim on 25 August 2000. It maintained its delay claim and the defective works claim. In this defence, it admitted a matter that I should mention in respect of this application which appears in paragraph 27 of the pleading. It admitted that in calculating the amount appearing on each of the progress certificates 15 to 30 inclusive, the architect took into account an amount in respect of liquidated damages which, in the case of progress certificates 15 to 29, was expressed to be "provisional", which amount increased with each progress certificate until it reached the amount of $625,000. 8 Additionally, the amended cross-claim, made an estoppel claim which relied upon an alleged agreement on 15 September 1997 referred to as the consolidated claim agreement and an alleged agreement referred to as the time bar waiver agreement. 9 Parklane filed a further amended defence and a further further further amended cross-claim some time in November 2000. It amended its defective works claim by pleading particular express clauses in the contract alleging that the architect had directed Cordukes to rectify some of the works that the architect had taken a particular view about and an alleged failure in Cordukes to comply with the direction of the architect. 10 The schedule to the pleading has been further amended. Indeed, counsel for Cordukes has provided a document entitled "Chronology Of Proceedings" which dates from 17 November 1999 effectively on this aspect to 29 September 2000. Those amendments to those defences and cross-claims have precipitated amendments to the reply filed by Cordukes. 11 The history of the litigation is lengthy. As I said, it commenced in November 1999. There have been approximately twelve directions given, nine of which have meant that legal representatives have had to appear in court. There have been interlocutory applications in respect of subpoenaed documents and the like and claims for privilege and I understand, although the detail is not before me, that there has been a related separate proceeding between the parties. One of the matters that occurred during the course of the directions were orders in respect of discovery. That discovery, I am informed by the parties, is substantially completed. 12 This motion was filed on 26 March 2001 and when it first came before me, I took the view that it simply could not be heard in the usual Friday Construction List. It was obvious to me that it had all the hallmarks of a case which required a special fixture. The motion was fixed before me for hearing yesterday, and I have heard it to completion today. Mr Underwood of counsel appears for Parklane, the applicant. Mr Hunt of counsel appears for Cordukes, the respondent to the motion. 13 There have been a number of other hearings of an interlocutory nature prior to the hearing of the motion by reason of claims for privilege and the way in which the evidence has been complied by Parklane in respect of a particular schedule of costs to which I will refer in due course. 14 Parklane seeks security in the amount of $425,000, together with a figure of $20,000 per month for a particular future period. The application is brought pursuant to section 1335(1) of the Corporations Law which provides: "Where a corporation is plaintiff in any action or other legal proceeding, the Court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay proceedings until the security is given."